Financial Report19 | 20

Contents

		 LEM Group5

Consolidated financial statements

10Notes to the consolidated financial statements

39

Auditor’s report

43

Corporate governance report

53

Compensation report

59

Auditor’s report		

LEM HOLDING SA

61

Financial statements

63

Notes to the financial statements

66

Auditor’s report

68Group subsidiaries

LEM Financial Report 19 | 20

Page 3

Consolidated statement offinancial position

LEM Group

AssetsNotes

31.3.2020

31.3.2019

in CHF thousands

Current assets
Cash and cash equivalents

19’243

12’538

Accounts receivable

558’25668’651Inventories

6

33’76439’211

1’332

2’571

Income tax receivable
Other current assets

7

Total current assets

2’828

2’226

115’423125’197

42’209Noncurrent assets
Property, plant and equipment

8

45’155Right-of-use assets

9

5’962

0

Intangible assets

10

4’474

5’178

Deferred tax assets

20

58’277

13’494

Other noncurrent assets

11

1’023

1’036

Total noncurrent assets

114’891

61’916

Total assets

230’313187’113

Notes

31.3.2020

31.3.201912

22’116

22’76025’331

26’047

Liabilities and equity
in CHF thousands

Current liabilities
Accounts payable
Accrued expenses
Lease liabilities

9

1’629

0

Income tax payable

20

36’692

5’253

Current provisions

13

2’288

1’778

9’000

8’000

Interest-bearing loans and borrowings
Other current liabilities

14

Total current liabilities

916

660

97’97164’498

Noncurrent liabilities
Noncurrent lease liabilities

9

4’514

0

Noncurrent provisions

13

148

1’980

Deferred tax liabilities

20

3’020

3’559

Other noncurrent liabilities

14

7’297

3’951

Total noncurrent liabilities

14’9799’490

Total liabilities

112’950

73’988EquityLEM Financial Report 19 | 20

Page 4

Share capital

15

570

570

Treasury shares

15

(581)

(983)

Reserves

15

5’082

11’616

Retained earnings

112’292

101’922

Total equity

117’363113’125

Total liabilities and equity

230’313187’113LEM Financial Report 19 | 20

Page 5

Consolidated
income statement

Consolidated statement ofcomprehensive income

April to March
Notes

2019/20

April to March2018/19

in CHF thousands

Notes

Sales

Net profit for the period recognized in the income statement

307’942321’591(165’195)(175’098)

Gross margin

142’747

146’493

Other comprehensive income to be reclassified to profit and loss
in subsequent periods

Sales expenses(28’232)(29’733)

Currency translation difference

Administration expenses(28’270)(24’640)

Research & development expenses(28’038)(27’576)

Cost of goods sold

Other income
Operating profit

120

252

58’32764’796

Financial expenses

17

(505)

(179)

Financial income

18

191

155

Exchange effect19(2’379)(2’519)55’634

Profit before taxes
Income taxes

20

Net profit for the year
Earnings per share, in CHF
Basic & diluted earnings per share

21

Income tax
Total other comprehensive income to be reclassified to profit and loss
in subsequent periods

2018/1960’69352’376(6’132)(1’338)Page 6525

66(5’607)(1’272)(4’736)

Other comprehensive income not to be reclassified to profit and loss
in subsequent periods
Remeasurement gains /(losses) on defined benefit plans

23(3’469)

Income tax

20

358

1’007

62’252

Total other comprehensive income not to be reclassified to profit and loss
in subsequent periods(3’111)(3’730)

Other comprehensive income /(loss) for the period, net of tax(8’719)(5’002)

Total comprehensive income for the period

51’97547’3745’059(9’876)

60’69352’376

53.27

45.97

The accompanying notes are an integral part of the consolidated financial statements.

LEM Financial Report 19 | 20

2019/20in CHF thousands

LEM Financial Report 19 | 20

Page 7

Consolidated statement ofchanges in equity

Consolidated cash flow
statement

Attributable to shareholders
Notes
in CHF thousands

1 April 2018

Sharecapital570

Treasuryshares
(1’091)

Capitalreserve
13’034

Translation
reserve(37)

Net profit for the year
Other comprehensive income/(loss)(1’272)

Total comprehensive income(1’272)

Dividends paid

15

Movement in treasury shares

15

31 March 2019570

1 April 2019

570

109

(109)

(983)

12’926(983)

12’926(1’310)Retainedearnings
99’101111’577

52’37652’376(3’730)(5’002)48’64647’374(45’561)(45’561)

(265)

(265)

101’922113’125(1’310)101’92260’69360’693

Other comprehensive income/(loss)(6’132)(2’587)(8’719)Total comprehensive income(6’132)58’107

51’975(47’855)(47’855)

119

119

112’292

117’363

Net profit for the year

Dividends paid

15

Movement in treasury shares

15

31 March 2020

570

402

(402)

(581)

12’524(7’441)

The amount available for dividend distribution is based on LEM HOLDING SA shareholders’ equity determinedin accordance with the legal provisions of the Swiss Code of Obligations.

April to MarchTotalequity113’125

Notes

2019/20

2018/1955’63462’252in CHF thousands

CASH FLOW FROM OPERATING ACTIVITIESProfit before taxes
Adjustment for noncash items and taxes paid
Net financial result

(23)

14

Derivative financial instruments revaluation

(488)

(73)

14’460

9’056

0

2’734

Depreciation and amortization
Impairment loss
Gain / Loss on disposal of fixed assets
Increase (+) / decrease (-) of provisions and allowances
Movement in pension

432

402

1’025

3’791

378

(1’000)Interest received

112

113

Interest paid

(90)

(127)

Taxes paid

(7’723)(14’852)

Cash flow before changes in net working capital

63’71862’310Change in inventories

2’296(4’908)Change in accounts receivable and other current assets

6’652(3’511)

Change in payables and other liabilities

955

(342)

Cash flow from changes in net working capital

9’902(8’761)

Cash flow from operating activities

73’62053’549CASH FLOW FROM INVESTING ACTIVITIESInvestment in fixed assets

8(14’346)(14’243)

Investment in intangible assets

10

(325)

(365)

Increase (–) in other assets

(313)

(610)

Decrease (+) in other assets

258

465

(14’725)(14’754)

Cash flow from investing activities
CASH FLOW FROM FINANCING ACTIVITIESTreasury shares acquired (–)

15(8’824)(10’445)

Treasury shares divested (+)

15

8’943

10’180

Payment of lease liabilities

9(4’519)0

Dividends paid to the shareholders of LEM HOLDING SA

15(47’855)(45’561)

Increase (+) in financial liabilities

72’50052’000Decrease (–) in financial liabilities(71’500)(49’000)

Cash flow from financing activities(51’256)(42’826)

Change in cash and cash equivalents

7’640(4’030)Cash and cash equivalents at the beginning of the period

12’538

17’630(934)(1’062)

19’243

12’538Exchange effect on cash and cash equivalents
Cash and cash equivalents at the end of the period

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Page 9

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

1.
General information
LEM Group (the Group) is a leading company in electrical measurement. LEM engineers the best solutions for energy and mobility, ensuring that its customers’ systems are optimized, reliable and safe. The Group has operations in fifteen countries andemploys 1’497 people per 31 March 2020. The parent company of LEM Group is LEM HOLDING SA (the Company), which is alimited company incorporated in Switzerland.
The registered office is at Avenue Beauregard 1, CH-1700 Fribourg. The financial year ends on 31 March (the year). The Company has been listed on the SIX Swiss Exchange since 1986.
The Board of Directors approved the consolidated financial statements on 12 May 2020, to be submitted for approval by the
Annual General Meeting of Shareholders on 9 June 2020.
2.
Significant accounting principles
2.1 Basis of preparation
The consolidated financial statements of LEM Group have been prepared in accordance with the International Financial andReporting Standards (IFRS) and interpretations published by the International Accounting Standards Board (IASB) and comply
with Swiss law.
The consolidated financial statements have been prepared using the historical cost convention except that, as discussed in
the accounting policies below, certain items like derivatives are recorded at fair value.
The financial information is presented in thousands of CHF. The totals are calculated with the original unit amounts, which could
lead to rounding differences. These differences in thousands of units are not changed in order to keep the accuracy of theoriginal data.
2.2 Adoption of new and revised International Financial Reporting Standards and interpretations
New standards in 2019/20
In 2019/20, LEM Group introduced the following revised standards and interpretations:Standard or ­interpretation

Title

Effective date

IFRS 16

Leases

1 January 2019

IFRIC 23

Uncertainty over Income Tax Treatments

1 January 2019

New and amended standards and interpretations
The Group applied IFRS 16 for the first time. The nature and effect of the changes as a result of adoption of this new accounting
standard are described below.
The initial application of the new interpretation IFRIC 23: uncertainty over income tax treatments did not have a material impact
on the Group’s consolidated financial statements.
Several other amendments and interpretations apply for the first time in 2019, but do not have an impact on the consolidated
financial statements of the Group. The Group has not early adopted any standards, interpretations or amendments that havebeen issued but are not yet effective.
Adoption of IFRS 16
IFRS 16 was issued in January 2016 and replaces IAS 17 Leases and related interpretations.
IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees
to account for all leases under a single on-balance sheet model comparable to finance leases under IAS 17.
The Group applied the new standard using the modified retrospective approach. Therefore, the cumulative impact of the adoption was recognized in retained earnings at 1 April 2019, and comparative figures were not restated.
The Group used the exemptions proposed by the standard on:– lease contracts for which the lease term ends within 12 months as of the date of initial application, and– lease contracts for which the underlying asset is of low value (meaning below USD 5 thousand). The Group has leases ofcertain office equipment (i.e., printing and photocopying machines) that are considered of low value.
Such lease contracts are considered as short-term leases and low-value leases and lease payments are recognized as otheroperating expenses in the period in which they are incurred.
At the commencement date of a lease, a lessee recognizes a liability measured at the present value of future lease payments
using the interest rate implicit in the lease or if this rate cannot be readily determined, an incremental borrowing rate (i.e., thelease liability); and a corresponding asset representing the right to use the underlying asset during the lease term (i.e., theright-of-use asset). Lease liabilities are thereafter recorded at amortized cost whereas right-of-use assets are depreciated on astraight-line basis over the lease term. Lessees are required to separately recognize the interest expense on the lease liability
and the depreciation expense on the right-of-use asset. Under the previous standard, operating leases were expensed on astraight-line basis as operating expenses.
Lessees are also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the leaseterm, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The
lessee generally recognizes the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
The first-time application of IFRS 16 led to the recognition of a lease liability of CHF 10.8 million and a right-of-use asset of CHF
10.8 million. All right-of-use assets are measured at an amount equal to the lease liability at transition.
The following table provides a reconciliation between the operating lease commitments as presented in the Note 24, of theGroup consolidated financial statements at 31 March 2019 and the lease liabilities recognized in the frame of IFRS 16 implementation at 1 April 2019:
In CHF thousands

Noncancellable lease payments as of 31 March 201911’139Lease payments for short-term and low value leases
Reassessment of renewal option

(440)
1’054

Lease liabilities as of 1 April 2019 – undiscounted

11’753

Effect of discounting(942)

Lease liabilities as of 1 April 2019 – discounted

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Page 11

10’811

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

The following table summarizes the impact of the adoption of the new standard:

EquityConsolidated statement of financial position
Assets

31.3.2019

In CHF thousands

IFRS 16
adoption

1.4.2019
restated

Current assets
Cash and cash equivalents

12’538

12’538

Accounts receivable

68’65168’651Inventories

39’21139’211

Income tax receivable

2’571

2’571

Other current assets

2’226

2’226

Total current assets

125’197

125’197

Share capital

570

570

Treasury shares

(983)

(983)

Reserves

11’616

11’616

Retained earnings

101’922101’922

Total equity

113’125

113’125

Total liabilities and equity

187’113

10’811

197’924

Future standards
There are no standards that are not yet effective and that would be expected to have a material impact on the Group in thecurrent or future reporting periods.
2.3

Summary of critical accounting estimates and judgments

Noncurrent assets
Property, plant and equipment

42’209Right-of-use assets

042’20910’811

10’811Intangible assets

5’178

5’178

Deferred tax assets

13’494

13’494

Other noncurrent assets

1’036

Total noncurrent assets

61’916

10’81172’727

Total assets

187’113

10’811

197’924

31.3.2019

IFRS 16
adoption

1.4.2019
restated

Liabilities and equity
In CHF thousands

1’036

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions
that affect the reported amounts of revenues, expenses, assets, liabilities and related disclosures at the date of the financial
statements. These estimates are based on management’s best knowledge of current events and actions that the Group mayundertake in the future. However, actual results could differ from those estimates. The key assumptions concerning the futureand other key sources of estimation uncertainty at the reporting date are discussed below.
LeasesThe Group assessed whether a contract is or contains a lease at inception of the contract. This assessment involves the exercise of judgment about whether it depends on a specific asset, whether the Group obtains substantially all the economic
benefits from the use of that asset, and whether the Group has the right to direct the use of the asset.

Current liabilities
Accounts payable

22’76022’760Accrued expenses

26’04726’047

Lease liabilities

0

4’568

4’568

Income tax payable

5’253

5’253

Current provisions

1’778

1’778

Interest-bearing loans and borrowings

8’000

8’000

Other current liabilities

660

Total current liabilities

64’498660
4’568

69’066

Noncurrent liabilities
Noncurrent lease liabilities

0

6’243

6’243

Noncurrent provisions

1’980

1’980

Deferred tax liabilities

3’559

3’559

Other noncurrent liabilities

3’951

Total noncurrent liabilities

9’490

6’243

15’733

Total liabilities

73’988

10’811

84’799LEM Financial Report 19 | 20

Page 12

Impairment of goodwill, other intangible assets and property, plant and equipment
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. Other intangible assets andproperty, plant and equipment are tested for impairment if there is a triggering event indicating a potential impairment. These
calculations require the use of estimates in particular to the expected growth of sales, discount rates and development of raw
material prices.

3’951

Provisions
Provisions are recognized only if the specific criteria under IFRS are met. Provisions represent presumed obligations arisingfrom past events and are recognized only if their amount can be estimated reliably. Nevertheless, provisions are based onassumptions.
Income and other taxes
The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. Some of these positions are
inherently uncertain and include those relating to transfer pricing matters and the interpretation of income tax laws applied tocomplex transactions. The Group periodically reassesses its tax positions. Changes to the financial statement recognition,measurement, and disclosure of tax positions are based on management’s best judgment given any changes in the facts, circumstances, information available and applicable tax laws.

LEM Financial Report 19 | 20

Page 13

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

Employee benefits
The standard requires that certain assumptions are made in order to determine the amount to be recorded for defined benefit
obligations and pension plan assets, in particular for defined benefit plans. These are mainly actuarial assumptions such as
expected salary increase, employee turnover and discount rates. Substantial changes in the assumed development of any ofthese variables may significantly change LEM Group’s retirement benefit obligation and pension plan assets.

The following table summarizes the main exchange rates that have been used in the translation process:Valuation of deferred tax assets
The carrying amount of deferred tax assets is reviewed on each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
2.4 Basis of consolidation
The consolidated financial statements are comprised of LEM HOLDING SA and of its subsidiaries.
Subsidiaries
Subsidiaries are those entities over which the Group has control. Control is when the Group is exposed, or has rights, to variable
returns from its involvement with subsidiary and has the ability to affect those returns through its power over the subsidiary to
direct the relevant activities.
Business combinations are accounted for using the acquisition method. Companies that are acquired are included when control is obtained and are consolidated until control is transferred to the acquirer. The costs of purchasing a company are determined as the sum of the fair value of the assets that are to be paid to the seller and the obligations that are entered into, or
acquired, on the date of purchase. Identifiable acquired assets, liabilities and contingent liabilities are recognized at their fairvalue as of the date of their acquisition. The Group’s share of the purchase price that exceeds the fair value of the identifiable
net assets is recognized as goodwill. The Group’s share of the fair value of the identifiable net assets that exceeds the purchaseprice is shown as gain on bargain purchase on the income statement.
Intragroup assets and liabilities as well as income and expenses are set off against each other.
Unrealized intragroup profits particularly on inventories and fixed assets are eliminated.
Associates
Investments in associated undertakings are accounted for using the equity method. These are undertakings over which theGroup exercises significant influence, but which it does not control.
No associated undertakings exist as per 31 March 2020 and 31 March 2019.
2.5

Foreign currencies

Currency

Income statementof 2019/20

Income statementof 2018/19

Balance sheet
31.3.2020

Balance sheet
31.3.2019

Average rate in CHF

Average rate in CHF

Year-end rate in CHF

Year-end rate in CHF

BGN

0.561

0.586

0.541

0.571

CNY

0.142

0.147

0.136

0.148

DKK

0.147

0.154

0.142

0.150

EUR

1.097

1.146

1.059

1.116

GBP

1.255

1.299

1.191

1.296

JPY

0.00910.00890.00890.0090

MYR

0.235

N/A

0.223

N/A

RUB

0.015

0.015

0.012

0.015

USD

0.987

0.989

0.963

0.995

Foreign currency transactions
Foreign currency transactions are translated at the market rate prevailing at that time. The monetary assets and liabilities aretranslated at the year-end rates while nonmonetary assets are translated at historical rates. Gains and losses arising from thetransactions as well as from the translation of monetary assets and liabilities in foreign currencies are recorded as income or
expenses in the income statement (except from translation differences arising from a monetary item that forms part of theGroup’s net investment in a foreign operation, which are included in shareholders’ equity).
2.6 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash at bank and cash at postal accounts and bank deposits with an original
maturity of three months or less from the date of acquisition, that are readily convertible to known amounts of cash.
2.7 Inventories
Inventories are stated at the lower of cost or net realizable value. The first-in, first-out (FIFO) method is applied. The cost offinished goods and work in process comprise raw materials, direct labor costs and other costs that can be directly allocated,such as production overhead expenditures. Allowances are established when:– there is an objective indication that the Group will not be able to sell the goods in due time;– the goods are damaged, in excess or obsolete;– the net realizable value is below cost.

Functional and presentation currency
The consolidated financial statements are presented in Swiss francs as the presentation currency. The subsidiaries use local
currencies as their functional currency, which is the currency of the primary economic environment in which they operate.

2.8 Property, plant and equipment
Property, plant and equipment is stated at cost of acquisition or construction, less depreciation and any impairment. Depreciation is calculated on a straight-line basis on the following estimated useful life:

Foreign currency translation
All assets and liabilities in the balance sheets of subsidiaries that are denominated in the respective functional currencies aretranslated into Swiss francs at the year-end exchange rate. Items in the income statement and cash flow statement are translated at the average exchange rate for the year. The resulting translation differences are recognized in other comprehensive
income. When a foreign operation is disposed, the cumulative translation differences recognized in other comprehensive
income are transferred to the income statement.

Land

nil

Buildings

20 – 40 years

Machinery and equipment

5 – 8 years

Tools and moulds

2 – 5 years

Vehicles3 – 5 years

IT equipment

3 – 5 years

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Page 14

Page 15

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

Repairs and renewals are charged to the income statement when the expense is incurred. Subsequent expenditure on an itemof property, plant and equipment is capitalized only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably.

Other intangible assets
Other intangible assets with definite useful lives are carried at cost less amortization and any impairment.
Expenditure on computer software, acquired patents, trademarks and licenses is capitalized and amortized using the straightline method over their useful lives, not exceeding five years.

2.9 Leases
The Group recognizes a right-of-use asset and a corresponding lease liability with respect to contracts considered as a lease inwhich the Group acts as lessee, except for leases with a term of 12 months or less (“short-term leases”), and leases for which
the underlying asset is of a low value (“low-value asset”).
At the commencement date of a lease, a lessee recognizes a liability measured at the present value of future lease payments
using the interest rate stated in the contract or in the absence of such a rate an incremental borrowing rate (i.e., the lease liability) and a corresponding asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use
asset). Extension options are initially only considered if the Group is reasonably certain that such options are exercised. Leaseliabilities are subsequently remeasured in case the lease term is changing or if extension options are reassessed. Right-of-use
assets are adjusted accordingly if lease liabilities are reassessed.
Lease liabilities are thereafter recorded at amortized cost whereas right-of-use assets are depreciated on a straight-line basis
over the lease term.
Real estate leases
The Group leases buildings for use as office and warehouse space. Lease terms are negotiated on an individual basis andcontain a wide range of different terms and conditions. Leases are typically made for a fixed period of 1 to 15 years and may
include extension options.
Vehicles leases
The Group maintains some leased vehicles with an average lease term of 3 years.
2.10 Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of theacquired subsidiary at the date of acquisition. Goodwill on acquisitions is reported in the balance sheet under intangible assets
and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.

2.11 Impairment of tangible fixed assets, intangible assets and right-of-use assets
Assets that are subject to depreciation and amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value lesscost to sell and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash-flows (cash-generating unit).
The value in use is calculated based on the estimated future cash-flows expected to result from the use of the asset and eventual disposal, discounted using an appropriate noncurrent interest rate.
Goodwill is tested for impairment annually (at 31 March) and when circumstances indicate that the carrying value may be
impaired. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill
relates. Impairment losses relating to goodwill cannot be reversed in future years.
2.12 Financial assets
Financial assets comprise cash, receivables, certain accrued income, marketable securities and derivative financial instruments. Financial assets are recorded on the trade date.
Initial recognition and measurement
At initial recognition, financial assets are designated into two categories, financial assets at fair value through profit and loss
and at amortized cost.
Financial assets are initially recognized at fair value plus, in the case of a financial asset not at fair value through profit and loss,
directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification:– financial assets at fair value through profit and loss (refer to note 2.13);– loans and receivables are measured at amortized cost using the effective interest rate method, less impairment.

Research & development
Research costs are expensed as incurred. An intangible asset arising from development is recognized if, and only if, the Groupcan demonstrate the following:– the technical feasibility of completing the intangible asset;– Group’s intention to complete the intangible asset;– ability to use or sell the intangible asset and the expectation that the intangible asset will generate probable future economic
benefits;– the availability of adequate technical, financial and other resources to complete the development; and– the ability to measure the expenditure attributable to the intangible asset during its development reliably.
Such development costs are capitalized and amortized over the life of the product or process.

Accounts receivable are carried at original invoice amount less an allowance made for doubtful accounts based on a review ofall outstanding amounts at the year-end covering expected lifetime credit losses. Allowances for doubtful accounts are established when there is an objective indication that the Group will not be able to collect the amounts due. Allowances for doubtful
accounts are written off when identified irrecoverable. For accounts receivable that are not individually adjusted, LEM applies
the simplified approach for the recognition of the expected lifetime losses using a provision matrix.

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Page 16

Other receivables are measured at amortized cost less allowances for amounts that are deemed not to be recoverable.
2.13 Derivative financial instruments
The Group uses derivative financial instruments to hedge foreign exchange risks of forecasted transactions. Derivative financial
instruments comprise forward exchange contracts.

Page 17

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

Derivative financial instruments are initially measured at fair value and subsequently at fair value through profit and loss. Any
gains and losses arising from changes in fair value on derivatives are taken directly to the income statement which means that
the Group does not apply hedge accounting.
Derivative financial instruments are shown as part of other current assets and other current liabilities. In case the maturity ismore than one year, derivative financial instruments are recognized under other noncurrent assets or other noncurrent liabilities.

LEM Incentive System
The LEM Incentive System consists of a short-term incentive component and a long-term incentive component.
The short-term incentive component compensates for the actual annual results and achieved performance. The long-term
incentive plan rewards the members of the Executive Management and Senior Managers for the sustainable financial performance of the Group. Both elements are cash settled and the bonus payments are made in the first four months of the following
fiscal year. The estimated payments are accrued for per year-end.

2.14 Financial liabilities
Financial liabilities comprise bank loans, payables, certain accrued expenses and derivative financial instruments at the end of
the period. Financial liabilities are initially recorded on the trade date.
All financial liabilities are recognized initially at fair value less, in the case of financial liabilities not at fair value through profit andloss, directly attributable transaction costs.
Financial liabilities that are due within 12 months after the balance sheet date are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability until more than 12 months after the balance sheet date.
Borrowing costs are expensed as incurred.

2.16 Provisions and contingent liabilities
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of
the obligation.

Subsequent measurement
Subsequently, they are measured at amortized cost based on their effective interest rate. Interest expenses and foreign currency revaluations are recognized in the income statement. On derecognition, gains and losses are recognized in the income
statement. Financial liabilities are derecognized when the contractual obligations are fulfilled, cancelled or expire.
2.15 Employee benefits
The Swiss and German subsidiaries provide a defined benefit plan for employees; the other subsidiaries provide defined contribution plans. In both cases the charges are included in the related periods in the personnel expenses of the various functions
where the employees are located.
Defined benefit plan
The defined benefit obligation is determined annually by qualified independent actuaries. The obligation and costs of pension
benefits are determined using the projected unit credit method. Service costs are part of personnel expenses and consist of
current service costs, past service costs and gains/losses from plan settlements. Past service costs are recognized at the earlier of the date when the plan amendment occurs, or when restructuring costs are recognized. They include plan amendment
and curtailment. Gains or losses on settlement of pension benefits are recognized when the settlement occurs. Net interestis recorded in the financial result and is determined by applying the discount rate to the net defined benefit liability/asset thatexists at the beginning of the year. Actuarial gains and losses resulting from changes in actuarial assumptions and experience
adjustments are recorded in other comprehensive income as remeasurements of employee benefits. The return on plan assets(excluding interest based on the discount rate) and any change in the effect of an asset ceiling are also recorded in this line.
In accordance with IFRIC 14, any assets resulting from surpluses in defined benefit plans are limited its economic benefit suchas to the value of the maximum future savings from reduced contributions.
Defined contribution plan
The subsidiaries sponsor defined contribution plans including state plans based on local practices and regulations. Defined
contribution plan expenses are recorded in the income statement as incurred.

LEM Financial Report 19 | 20

Page 18

Warranty and customer claims
The Group recognizes the estimated liability to replace products still under warranty at the balance sheet date. This positionis calculated based on past history of the level of repairs and replacements. Additional specific provisions are booked whenrequired.
Litigations
The Group recognizes the estimated country and entity-specific risks relating to litigations with former personnel or indirect
taxation.
Restructuring
A constructive obligation to restructure arises only when an entity has a detailed formal plan for the restructuring identifying
at least:– the business or part of a business concerned;– the principal locations affected, function and approximate number of employees who will be compensated for terminating
their services;– the expenditures that will be undertaken; and– when the plan will be implemented;
and raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
Contingent liabilities
Contingent liabilities arise from past events where the outcome depends on future events. As the probability either cannot bemeasured reliably or the probability for a subsequent outflow lies below 50 %, contingent liabilities are not recognized in thebalance sheet but are described in the notes.
2.17 Share capital
LEM HOLDING SA has only ordinary registered shares. Dividends on ordinary shares are deducted from equity in the period inwhich they are paid.
Treasury shares
Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain orloss is recognized in the income statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
Any difference between the carrying amount and the consideration is recognized in retained earnings.

LEM Financial Report 19 | 20

Page 19

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

2.18 Revenue recognition
Revenue from the sale of products is recognized at a point in time when LEM satisfies its performance obligation, which is themoment when the customer acquires control over the product. This is generally achieved at delivery of the products. Revenue
is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of
payment and excluding taxes or duty.
Revenue from the sale of products comprises all revenues that are derived from sales of products to third parties after deduction of price rebates and value-added tax.

For management purposes, LEM Group is organized into two operating segments, Industry and Automotive. The Industry segment develops, manufactures and sells electronic components called sensors for the measurement of current and voltage ofvarious industrial applications. The Automotive segment develops, manufactures and sells sensors for applications in automotive markets.
4.

Revenue information

Regional information
2.19 Income taxes and deferred taxation

Industry
2019/20

2018/19

Europe97’701102’899

North America

26’12928’678Asia and rest of
the world

116’540

118’653

Total

240’371

250’230

In CHF thousands

Income taxes
Income taxes comprise all current and deferred income taxes, including the withholding tax payable on profit distributions within the Group. Income taxes are recognized in the consolidated income statement except for income taxes on transactions thatare recognized directly in shareholders’ equity or in other comprehensive income.
Deferred taxation
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of
assets and liabilities and their carrying amounts in the financial statements. Deferred taxes are determined using tax rates that
apply, or have been substantially enacted, on the balance sheet date in the countries where the Group is active. Tax losses
carried forward and deductible temporary differences are recognized as deferred tax assets to the extent that it is probablethat tax profit will be available in the future against which the tax losses carried forward can be utilized. Deferred tax assets andliabilities are offset against each other if the corresponding income taxes arise by the same tax authority and a legally enforceable right for offsetting exists.
3.

China
In CHF thousands

Industry
2019/20

2018/19

Automotive
2019/20

2018/19

LEM Group
2019/20

2018/19

Income statement
Sales

240’371

250’230

67’571

71’361

307’942321’591

EBITDA

60’30164’503

12’48612’08372’78776’585

Operating profit

50’43654’903

7’891

9’893

58’32764’796

Net financial expenses(2’693)(2’544)

Taxes

5’059

(9’876)

Net profit for the year

60’69352’376

8’490

7’717

Depreciation and amortization
Tangible assets

5’962

5’880

Intangible assets

942

Right-of-use assets

2’961

Impairment loss
Total

2’528

1’837

986

313

352

1’256

1’338

N/A

1’753

N/A

4’714

N/A

0

2’734

0

0

0

2’734

9’865

9’600

4’595

2’190

14’460

11’790Capital expenditures
Tangible assets

7’484

9’583

6’862

4’660

14’346

Intangible assets

253

284

71

81

325

365

7’737

9’867

6’933

4’741

14’67014’608

Total assets

Page 20

14’243

2018/19

5’615

4’336

103’317107’235

11’257

14’53937’387

43’217

50’69952’486167’239

171’139

67’571

71’361

307’942321’591

USA

Germany

Japan

2019/20

2018/192019/20

2018/192019/20

2018/192019/20

2018/19

Sales

98’680106’340

35’31141’15531’606

38’11329’43028’344

Noncurrent assets1

19’95815’853

55

23

183

259

3’966

3’894

Right-of-use assets

2’642

N/A

234

N/A

80

N/A

398

N/A

2019/20

2018/19

Italy

In CHF thousands

2019/20

Geographical information

In CHF thousands

Business segment information

LEM Group

2018/19

Sales

Segment Information

LEM Financial Report 19 | 20

Automotive
2019/20

Sales

Switzerland
2019/20

Rest of the world

LEM Group

2018/192019/20

2018/192019/20

2018/19

10’031

11’667

3’587

3’856

99’29892’116307’942321’591

Noncurrent assets1

36

49

15’92916’231

9’501

11’07849’62947’387Right-of-use assets

85

N/A

153

N/A

2’370

N/A

5’962

N/A

1 Other than financial instruments, deferred tax assets, post employment benefit assets

Sales are reported as per place of transaction.

5.

Accounts receivablein CHF thousands

Accounts receivable – trade
Allowance for doubtful accounts / expected credit losses
Total accounts receivable – trade

31.3.2020

31.3.201952’84462’468

(763)

(838)

52’08061’630

Other receivables

6’175

7’020

Total

58’25668’651LEM Financial Report 19 | 20

Page 21

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

Movements of allowance for doubtful accounts / expected credit losses

8.
2019/20in CHF thousands

2018/19

Property, plant and equipment
Land and buildings

Machinery andequipment

Total

Net book value 1 April 201871

39’86639’937in CHF thousands

Opening position

838

763

Foreign exchange effect(0)(1’118)(1’118)Additions charged / (reversals credited) to income statement

23

437

Investment

6

14’237

14’243

Amounts written off

(70)

(350)

Disposal

0

(402)

(402)

Foreign exchange effect

(28)

(12)

Impairment gain / (loss)

0(2’734)(2’734)

Total

763

838

Depreciation charge for the year

(15)

(7’702)(7’717)

Net book value 31 March 201962

42’14642’209At cost of acquisition

Aging analysis of accounts receivable
Not Due< 30 days

31– 90 days

91– 180 days

> 180 days

Total

49’839

8’793

2’825

694

317

62’468

Allowances for doubtful accounts /expected credit losses

(204)

(42)

(127)

(155)

(311)

(838)

Other receivables

6’832

189

0

0

0

7’020

Total

56’467

8’940

2’698

539

7

68’651

In CHF thousands

31 March 2019
Accounts receivable – trade

31 March 2020
Accounts receivable – trade

44’040

5’415

2’633

241

514

52’844

(90)

(13)

(132)

(60)

(469)

(763)

Other receivables

6’172

0

0

0

3

6’175

Total

50’123

5’402

2’501

181

49

58’256

Allowances for doubtful accounts /expected credit losses

6.

Net book value 31 March 2019370

119’297

119’668(308)(77’151)(77’459)62

42’14642’209Net book value 1 April 201962

42’14642’209Foreign exchange effect(0)(2’425)(2’425)Investment

0

14’34514’345

Disposal

(8)

(424)

(432)

0

(52)

(52)

Depreciation charge for the year(10)

(8’480)(8’490)Net book value 31 March 202044

45’11145’155

Other movements

At cost of acquisition142

125’070

125’213

Accumulated depreciation(98)(79’960)(80’057)44

45’11145’155Net book value 31 March 2020

9.
LeasesIn 2018/19 operating leases were expensed on a straight-line basis and amounted to CHF 5’646 thousand.

Inventories
31.3.2020

31.3.2019

Raw material

18’10017’841Work in progress

1’950

2’203

Finished goods and goods for resale

13’71419’167

Total

33’76439’211in CHF thousands

9.1 Right of use assets
The group presents the right of use asset of the lease as per the definition of IFRS 16:
Real estate

VehiclesTotal

10’445366

10’811

(390)

(26)

(416)

603

104

707

(426)

0

(426)

Depreciation charge for the year

(4’505)(209)(4’714)

Net book value 31 March 2020

5’727

235

5’962

in CHF thousands

Net book value 1 April 2019
Foreign exchange effectAddition

The inventories include allowances of CHF 4’309 thousand (at 31 March 2019 CHF 3’071 thousand).

7.

Accumulated depreciation

Remeasurement

Other current assets
31.3.2020

31.3.2019

Advances to suppliers

1’119

608

Prepayments and accrued income

1’351

1’538

in CHF thousands

Derivative financial instruments

320

0

Other current assets

37

80

2’828

2’226

Total

LEM Financial Report 19 | 20

Page 22

At cost of acquisition

10’172441

10’613

Accumulated depreciation(4’445)(206)(4’651)

5’727

235

5’962

Net book value 31 March 2020

LEM Financial Report 19 | 20

Page 23

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

9.2 Lease liabilities
The group presents the lease liabilities in the table below:

10.

Intangible assets
Goodwill

Patents

Other
intangible assets

Total

3’141

215

2’825

6’181

(13)

(0)

(16)

(29)

Investment

0

33

332

365

Other movements

0

1

(1)

(0)

Amortization charge for the year

0

(76)

(1’262)(1’338)Net book value 31 March 2019

3’127

173

1’878

5’178

At cost of acquisition

3’127

5’408

10’73919’2740(5’235)(8’862)(14’096)

Net book value 31 March 2019

3’127

173

1’878

5’178

Net book value 1 April 2019

3’127

173

1’878

5’178

201

0

(26)

174

Investment

0

0

325

325

Other movements

0

0

52

52

Amortization charge for the year

(0)

(43)

(1’212)(1’256)

Net book value 31 March 2020

3’328

130

1’016

4’474

At cost of acquisition

3’328

in CHF thousands

Current leaseliabilities

in CHF thousands

Noncurrent
lease liabilities

Total

Net book value 1 April 2018
Foreign exchange effectBalance as per 1 April 2019
Payment of lease liabilities including interest

4’568

6’243

10’811(4’825)0(4’825)

68

639

707

Non-cash items
AdditionInterest

298

0

298

Remeasurements

(27)

(399)

(426)

Transfer from noncurrent to current

1’650(1’650)0Exchange differences

(104)

(319)

(423)

Balance as per 31 March 2020

1’629

4’514

6’143

Accumulated amortization

Foreign exchange effect

For the first-time application of IFRS 16, the weighted average incremental borrowing rate was 2.76 %.
The following table presents the contract undiscounted cash flows for lease obligations as at 31 March 2020:
31.3.2020

In CHF thousands

Within 1 year

2’392

Within 1 year to 5 years

4’784

Above 5 years

Net book value 31 March 2020

3’328

465

8’727

12’520(335)(7’711)(8’046)

130

1’016

4’474

894

9.3 Other lease disclosures
The following expenses related to the Group’s leasing activities are recognized in the income statement:
31.3.2020

In CHF thousands

Expenses relating to short-term leases / low value assets
Depreciation of right-of-use assets(541)(4’714)

Interest expenses on lease liabilities

(298)

Total

(5’553)

9.4 Lease commitments
The Group committed to a lease agreement for its new headquarters. The lease is starting on 1 September 2021 for 15 years.
The estimated right of use and liabilities are amounting to CHF 27 million.
Short-term lease commitments amount to CHF 300 thousands at 31 March 2020. The Group also bears a commitment of CHF
268 thousands at 31 March 2020 related to non-lease components of which CHF 67 thousands to be paid within 1 year and CHF
201 thousands within 1 year and 5 years.

LEM Financial Report 19 | 20

Accumulated amortization

Page 24

The entire goodwill of LEM Group results from the acquisition of NANA in 2000/01 and is allocated to the cash-generating unit
LEM Japan KK. The goodwill relates to the Industry segment. The recoverable amount has been determined based on value-inuse calculations. These calculations use cash flow projections of five years based on financial business plans and budgets approved by management. The projections include assumptions concerning revenue growth and expected operating costs overthe next five years plus a continuous period. Average revenue growth is projected at 9.1 % and operating costs were estimatedbased on the experience of management. The pretax discount rate used within these cash flow calculations is 12.9 % (2018/19
12.8 %) and is based on the weighted average cost of capital of a peer group. The carrying value of the cash-generating unit
including goodwill was compared to the value in use and no impairment was found to be present for the year ended 31 March
2020.

11.

Other noncurrent assets
31.3.2020

in CHF thousands

31.3.2019

Loan to personnel

272

422

Deposits & guarantees

751

613

1’023

1’036

Total

LEM Financial Report 19 | 20

Page 25

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

12.

14.

Accounts payable
31.3.2020

31.3.2019

Total accounts payable – trade

19’00019’581Other payables

3’116

3’179

Total

22’116

22’760in CHF thousands

Other liabilities
31.3.2020

31.3.2019

Post-employment benefit plans

6’562

2’692

Derivative financial instruments

0168

Other liabilities

1’650

1’751

Total

8’212

4’611

In CHF thousands

Of which current

13.

Of which noncurrent

Provisions
Warranty andcustomer claims

Litigations

Balance as per 1 April 2018

1’505

Additional provisions

2’399

Unused amounts reversed

Other

Total

204

0

1’709

0

976

3’375

(790)

0

0

(790)

Utilized during the year

(526)

0

0

(526)

Foreign exchange effect

(12)

(5)

8

(9)

2’575

198

985

3’758

In CHF thousands

Balance as per 31 March 2019
Of which current

1’778

Of which noncurrent

1’980

Balance as per 1 April 2019

2’575

198

985

715

0

517

1’232

Unused amounts reversed

(816)

(198)

(780)

(1’794)

Utilized during the year

(620)

0

0

(620)

Foreign exchange effect

(132)

0

(9)

(141)

Balance as per 31 March 2020

1’723

0

713

2’436

Additional provisions

Of which current

3’758

2’288

Of which noncurrent

148

LEM Financial Report 19 | 20

Page 26

3’951

15. Equity
Share capital
The nominal share capital of CHF 570’000 comprises 1’140’000 registered shares, each with a nominal value of CHF 0.50.
There is neither authorized nor conditional share capital outstanding.
Investments in shares of LEM HOLDING SA held by the Group are classified as treasury shares and are accounted for at historicalcost. Treasury shares are not entitled to dividends.
Movement of treasury shares
NumberIn number of shares, in CHF

High

Price per share in CHF
AverageLow

Value
in CHF thousands

Value 1 April 2018

652

Purchases at cost

8’078

1’714.36

1’277.98

935.44

10’445(7’935)

1’725.57

1’294.96

941.88(10’553)

6’773

1’500.27

1’302.78

902.11

8’824(7’012)

1’520.00

1’315.69

917.47(9’226)

Sales at cost
Value 31 March 2019

1’091

795

Sales at cost

Litigations
Despite the care that LEM applies in the separation process with personnel, such separation may result in legal conflicts. The
Group reviews all legal claims and takes appropriate actions to support its position and management’s estimates the reasonablerisk to be provided for.
The Company operates in multiple jurisdictions with complex legal and tax regulatory environments. In the frame of the continuous improvement of its processes and systems, LEM has reviewed the consumption taxes in several countries. It has appearedthat some LEM’s subsidiaries may not have been fully compliant with their local consumption tax regulations. As a consequence, LEM has estimated consumption tax provisions according to Management best judgment. Some of these positions
are inherently uncertain and include the interpretation of local regulations applied to complex transactions.

660

7’297

The increase of the post-employment benefit plan liability is mainly linked to the increase in the DBO coupled with the decreasein the fair-value of plan assets, as elaborated in note 23.

Purchases at cost

Warranty and customer claims
Provisions for warranty and customer claims have been estimated based on past experience and the risk assessment of management. The warranty provision is expected to be used over the next five years.

916

Value 31 March 2020

556

983

581

In CHF

Ordinary dividend per share 2018/19

42.00

Ordinary dividend per share 2019/20

40.00

A dividend of CHF 40 per share will be proposed by the Board of Directors to the Annual General Meeting of Shareholders of
the Group on 9 June 2020. The expected payout for dividends amounts to CHF 45.6 million.

LEM Financial Report 19 | 20

Page 27

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

16.

20. Income taxes, deferred tax assets and liabilities
The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. In certain of these jurisdictions, the Group has taken income tax positions that management believes are supportable and are intended to withstandchallenge by tax authorities. Some of these positions are inherently uncertain and include those relating to transfer pricing
matters and the interpretation of income tax laws applied to complex transactions. The Company periodically reassesses its tax
positions. Changes to the financial statement recognition, measurement, and disclosure of tax positions are based on management’s best judgment given any changes in the facts, circumstances, information available and applicable tax laws. Considering
all available information and the history of resolving income tax uncertainties, the Group believes that the ultimate resolution ofsuch matters will not have a material effect on its financial statements.
Differences between the final tax outcome and the amounts that were initially recorded impact the income and deferred taxes
in the period in which such determinations are made. The Group calculates its expected average tax rate as a weighted averageof the tax rates in the tax jurisdictions in which the Group operates.

Staff costs
Notes

2019/20

2018/19

Production(24’958)(27’013)Sales(18’599)(19’086)

Administration(14’116)(12’829)

Research and development(18’993)(15’931)

Total(76’667)(74’859)

Salaries and wages(72’638)(71’124)

Temporary employee costs(1’154)(2’365)(2’639)(1’255)

In CHF thousands

Cost of defined benefit plans

23.1

Cost of defined contribution plan

(236)

(115)

(76’667)(74’859)

31.3.2020

31.3.2019

Permanent employees

1’376

1’385

Temporary employees

112

83

Total
Number of employees at the end of the financial year

Apprentices
Total

9

9

1’497

1’477

LEM has taken the decision to repatriate all available dividends from its subsidiaries in the foreseeable future. Unrecoverable
withholding taxes are considered part of the expected tax rate. Deferred income tax liabilities have been established for unrecoverable withholding taxes that would be payable on the unremitted earnings of foreign subsidiaries.
2019/20

2018/19(41’199)(12’044)

45’611

1’850

488

0

In CHF thousands

A restructuring plan has been decided in January 2020 and has led to a one-off charge of CHF 1.5 million included in the salaries and wages.
17.

Current income taxes
Deferred taxes relating to the origination and reversal of temporary differences
Previously unrecognized deferred tax asset used to reduce deferred tax expense

Financial expenses

Deferred tax income/(expense) resulting from reduction in tax rates

In CHF thousands

2019/20

2018/19

Interest expenses

(388)

(127)

Other financial expenses

(117)

(52)

Total

(505)

(179)

Adjustment recognized in the period for current tax of prior year
Total

(112)

0

270

318

5’059

(9’876)

The tax income relating to components of other comprehensive income amounts to CHF 882 thousand for the year 2019/20(CHF 1’073 thousand in 2018/19).
The Group’s effective tax rate differs from the Group’s average expected tax rate as follows:18.

Financial income
2019/20

2018/19

Interest income on cash

191

155

Total

191

155

2019/20

2018/19(2’775)(1’491)

In CHF thousands

19.

Exchange effect2019/20

2018/19

Group’s average expected income tax rate

15.8

15.0

Group’s average expected withholding tax rate

1.0

1.6

16.8

16.6

Permanent differences

0.7

(0.2)

Changes in tax rates on deferred taxes

0.4

(0.0)

(0.5)

(0.5)
0

In %

Group’s average expected tax rate
Tax effect of

In CHF thousands

Exchange gains / (losses)

Adjustment in respect of previous periods’ income tax

Fair value revaluation on derivatives

488

73

Recognition of previously unrecorded tax losses(0.9)

Gains / (losses) on derivatives 1(93)(1’101)

Tax benefit from Group IP transaction(25.2)

0(2’379)(2’519)Other differences

(0.4)

(0.1)

Group’s effective tax rate

(9.1)

15.9

Total
1 Position includes cost of derivative hedging

The 2019/20 exchange effect is mainly driven by the foreign exchange losses linked to EUR and USD devaluation.

LEM Financial Report 19 | 20

Page 28

LEM Financial Report 19 | 20

Page 29

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

In 2019/20, the Group’s effective tax rate is negative reflecting a nonrecurring positive tax impact of CHF 14.0 million from thesale of technical Intellectual Property from LEM Intellectual Property SA based in Fribourg to LEM International SA based in
Geneva and to LEM Electronics China Co. Ltd.
This transaction generated additional current income taxes of CHF 34.2m in LEM Intellectual Property SA and a deferred tax
income of CHF 48.2m in both LEM International SA and LEM Electronics China Co. Ltd.

At 31 March 2020, the unrecognized losses carried forward are the following:

Last year the High New Technology Enterprise (HNTE) certificate has been granted to LEM Electronics China Co. Ltd.
Deferred tax assets and liabilities
Deferred taxes have been calculated on the following balance sheet positions:

AssetsAsset

Liability

Asset

Liability

58’199(1’763)17’500(5’687)

75

(69)

87

(68)

Inventories

913

(481)

1’220

(632)

Property, plant and equipment

1’157

(678)

2’366

(1’416)

Intangible assets

55’478(26)

13’491(2’956)

577

0

336

0

0

(509)

0

(615)

Liabilities

1’776(2’955)

1’372(3’251)

Provisions

206

(0)

270

(0)

1’570

0

1’102

0

0

(2’955)(0)(3’251)(8’938)Other assets

OthersWithholding tax on dividends
Gross deferred taxes

59’974(4’718)18’872

Offsetting(1’698)

1’698(5’378)

5’378

Net deferred taxes

58’277(3’020)13’494(3’559)In the next 10 years

0

3’787

Total

0

3’787

2019/20

2018/19

Earnings per share

Net profit for the year attributable to LEM shareholders – in CHF thousands

60’69352’376

Ordinary number of shares at the beginning of the year

1’140’000

1’140’000

Weighted average number of ordinary shares

1’140’000

1’140’000

Weighted average number of treasury shares

690

693

1’139’310

1’139’307

53.27

45.97

Weighted average number of shares outstanding
Earnings per share – basic and diluted in CHF

22. Related parties
Related parties are the Board of Directors and the Executive Managers as defined in the Corporate Governance guidelines.
The compensation to the Board of Directors is paid as a fixed fee in cash. The compensation for the Executive Management includes base salary, a performance-related bonus (LEM Incentive System), bonus and post-employment benefits.
In 2019/20 and 2018/19, no termination benefits have been paid. The base salary is the employee’s compensation before
deduction of the employee’s social security contributions. Bonus payments are effected in cash.
Compensation of the Board of Directors
2019/20

In CHF thousands

The balance sheet contains the following:
31.3.2020

31.3.2019

Deferred tax assets

58’277

13’494

Deferred tax liabilities(3’020)(3’559)Net assets / (liabilities)

55’256

9’934

LEM Group has CHF 577 thousand (CHF 336 thousand in 2018/19) of deferred tax asset on tax losses. The Group expects
that the concerned subsidiaries will be able to fully use the tax losses against future taxable profit. The deferred tax assets
increase of CHF 44.8m is mainly linked to the deferred tax asset of CHF 48.2m booked in relation with the technical Intellectual Property sale referred above slightly compensated by CHF-2.1m deferred tax asset decrease linked to the Intellectual
Property amortization of the period.

LEM Financial Report 19 | 20

Page 30

31.3.2019

Basic and diluted earnings per share

31.3.2019

Accounts receivable

Tax losses carried forward

31.3.2020

In CHF thousands

21.

31.3.2020
In CHF thousands

Unused tax loss carry-forwards not recognized in the balance sheet expire

2018/19

Annual fees

(870)

(850)

Total

(870)

(850)

2019/20

2018/19

Base salary(1’254)(1’070)Bonus(1’089)(790)

Compensation of the Executive Management
In CHF thousands

Company’s contribution to pension fund
Total

(129)

(112)

(2’473)(1’972)Servotronix Motion Control Ltd, a company presided by Ilan Cohen, has bought sensors for CHF 968 thousand in 2019/20 (CHF
897 thousand in 2018/19), including purchases done by its subsidiaries and subcontractors, from LEM Group at market price.
No other member of the Board of Directors has any significant business connection with LEM Group.

LEM Financial Report 19 | 20

Page 31Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

For details on the compensation of the Board of Directors and of the Executive Management, please refer to the compensation
report. Also, see Significant Accounting Principles 2.15 Employee benefits.

In CHF thousands

23. Retirement benefit obligations
The Group operates a defined benefit plan for all its employees in Switzerland with a collective foundation.

23.1 Cost of defined benefit plans
2019/20

Current service cost

3’049

2’624

Past service cost(421)

(1’370)Net interest (income) / cost
Total pension expenses recorded in consolidated income statement

This foundation is a separate legal entity which is not part of the Group. It is managed by a board having equal representationof employees and employers of the affiliated companies. It is supervised by the supervisory authority and complies with therequirements of Swiss pension law. The company’s liabilities are limited to contributions that are based on a percentage of theinsured salary under the Swiss law. According to Swiss law, the pension plan qualifies as a defined benefit plan under IAS 19
due to the various benefit guarantees included in the laws.

2018/19

11

(19)

2’639

1’236

Costs related to the pension plan were charged to the different functional departments based on salary costs.
Past service costs result from a change in conversion rate.

23.2 Remeasurements of employee benefits
The plan is funded by contributions from both employer and employees.
The plan participants are insured against the financial consequences of old age, disability and death. The retirement benefit isbased on a notional individual savings account converted at retirement into a fixed pension benefit.
The assets of the foundation are invested into a diversified portfolio. Death in service and disability benefits are insured with aninsurance company. The pension plan does not expose the affiliated companies to any additional unusual risks. No curtailments
or settlements occurred in 2019/20.

2019/20

2018/19

Experience adjustments on defined benefit obligation

2’048

3’811

Return on plan assets excluding interests

1’460

947

Total remeasurements recorded in other comprehensive income

3’507

4’758

31.3.2020

31.3.2019

Fair value of plan assets as per beginning of year

42’69142’716Return on plan assets excluding interest income(1’460)(947)

In CHF thousands

23.3 Change in fair value of plan assets
In CHF thousands

The funded status decrease of CHF -3.8 million is the result of the assumptions and demographic changes generating an
increase of the DBO of CHF +2.0 million, and by a decrease in the fair value of plan assets of CHF -1.5 million reflecting a net
negative return in the financial year 2019/20. The following main assumptions have been updated:– discount rate remains stable at 0.6 %;– interests credited on savings account from 0.6 % to 1 %;– salary increase rate remains stable at 1 %.

Interest income on plan assets
Employer’s contributions
Employees’ contributions

256

427

2’262

2’235

1’927

1’868

Benefits paid

(3’588)(3’608)Fair value of plan assets as per end of year

42’08842’691

31.3.2020

31.3.2019

Defined benefit obligation per beginning of year

44’55640’822Current service cost

3’049

2’624

Past service cost(421)

(1’370)

Employees’ contributions

1’927

1’868

In application of IAS 19, this adjustment was accounted for in other comprehensive income and did not impact the net profit
for the year.
23.4 Change in present value of defined benefit obligation
The subsidiaries abroad sponsor either defined contribution plans or defined benefit plans based on local practices and regulations. A former employee in Germany benefits from a defined benefit obligation amounting to CHF 373 thousand at 31.3.2020(CHF 377 thousand in 31.3.2019). Other subsidiaries’ defined benefit obligations in Japan, Bulgaria and Italy amount to CHF 439
thousand at 31.3.2020 (CHF 450 thousand in 31.3.2019).

31.3.2020

31.3.2019

Fair value of plan assets at year-end

42’08842’691

Defined benefit obligations at year-end

47’83844’556

Funded status (Net (liabilities)/assets in the balance sheet)(5’750)(1’865)

In CHF thousands

In CHF thousands

Interest cost

267

408

2’048

3’811

due to assumption changes

1’468

2’510

due to demographic changes

580

1’301

Benefits paid

(3’588)(3’608)

Defined benefit obligation per end of year

47’83844’556

Actual (gains) / losses

LEM expects to contribute CHF 2’284 thousand to its defined benefit plan in 2020/21.
The weighted average duration of the Defined Benefit Obligation (DBO) at the end of the current fiscal year is 19 years.
Past service costs result from a change in conversion rate.

LEM Financial Report 19 | 20

Page 32

LEM Financial Report 19 | 20

Page 33

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

23.5 Asset allocation of investments

23.7 Maturity structure of pension obligation
The following main cash outflows are expected in future periods:

Major categories of plan assets as a percentage of the fair value of total plan assets

In CHF thousands

Long-term target

2019/20

2018/19

Equity securities

36.0 %

36.0 %

32.5 %

Debt securities

34.0 %

33.0 %

28.6 %

Real estate25.0 %

27.0 %

28.3 %Cash and other investments

5.0 %

4.0 %

10.6 %

100.0 %

100.0 %

100.0 %In %Strategic pension plan allocations are determined by the objective to achieve a return on investment, which, together with thecontribution paid, is sufficient to maintain reasonable control over the various funding risks of the plans. Estimated returns on
assets are determined based on the asset allocation and are reviewed periodically. A temporary deviation from policy targets
is allowed.
Cash as well as most equity and debt securities have a quoted market price in an active market (Level 1 of fair value hierarchy).
Other assets including real estate and other investments do not have a quoted market price (Level 3 of fair value hierarchy).
23.6 Actuarial assumptions
2019/20

2018/19

Discount rate

0.60 %

0.60 %

Salary increases

1.00 %

1.00 %In %The present value of the defined benefit obligation is determined annually by independent actuaries using the projected unit
credit method. Actuarial assumptions are required for this purpose.
Sensitivities of significant actuarial assumptions
The sensitivity analysis is based on reasonable possible changes as of the end of the year 2019/20. Each change in a significant assumption was analyzed separately as part of the test.
The sensitivity of the DBO to changes in the main actuarial assumptions is as follows:in 1 year

1’522

in 2 years

1’728

in 3 years

1’796

in 4 years

1’934

in 5 years

1’737

in 6 to 10 years

10’96824. Contingent liabilities
The Group is from time to time impacted by changing political, legislative, fiscal and regulatory environments, including thoserelating to environmental protection. The frequency and effects on future operations and earnings are unpredictable and are
only partly covered by insurances. For the years 2018/19 and 2019/20, there is no contingent liability from a consolidated pointof view.

25. Financial risk management objectives and policies
The group classifies its financial assets and liabilities in the following categories as per IFRS 7:
Financial assets
31.3.2020
Fair value

31.3.2019
Fair value

Amortized
cost

Cash and cash equivalents

19’243

12’538X

Accounts receivable

58’25668’651X

Derivative financial instruments – current

320

0Other current financial assets

13

80

X
X

In CHF thousands

Other noncurrent financial assets

1’023

1’036

Total

78’85582’304

At fair value
through
profit andloss

X

Financial liabilities
DBO increase / DBO (decrease) – In CHF thousands

2019/20

2018/19

Discount rate
Increase by 0.25 %(2’152)(2’443)

Decrease by 0.25 %

2’312

2’640

Salary increase rate
Increase by 0.25 %

683

200

Decrease by 0.25 %

(673)

(196)

31.3.2020
Fair value

31.3.2019
Fair value

Other financial liabilities

Accounts payable

22’116

22’760X

Accrued expenses

25’331

26’047X

0

168

Lease liability

6’143

0

X

Other current financial liabilities

9’000

8’000

X

0

14

X

62’58956’989In CHF thousands

Derivative financial instruments – current

Other noncurrent financial liabilities
Total

LEM Financial Report 19 | 20

Page 34

LEM Financial Report 19 | 20

Page 35

At fair value
through
profit andloss

XNotes to the consolidated
financial statements

Notes to the consolidated
financial statements

Changes in liabilities arising from financing activities

Foreign currency risk
The Group operates globally and is exposed to various foreign exchange risks primarily to the USD, EUR, JPY, CNY and GBP.
The Group seeks to reduce those risks by optimizing its natural hedging (cash inflows and outflows in a specific currency
should be in balance as far as possible).
The Group’s policy states that 100 % of LEM’s net exposure for the main currencies EUR, USD and JPY is to be hedged on arolling 12-month basis. Currency risks also arise from translation differences that are not hedged by the Group when preparing
the consolidated financial statements in CHF. The foreign exchange translation is excluded from the calculation of the sensitivity analysis for currency risk below.

Cash impact

In CHF thousands

Interest-bearing loans and borrowings
Derivative financial instruments
Total

Fair values
changes andOthers

31.3.2019(49’000)

0

8’000

0

(73)

168

(49’000)

(73)

8’168

1.4.2018

Cash flows
Inflow

Cash flows(Outflow)

5’000

52’000

241

0

5’241

52’000Cash impact

In CHF thousands

Interest-bearing loans and borrowings
Derivative financial instruments
Total

Non-cash
impactNon-cash
impactFair values
changes andOthers

31.3.2020(71’500)

0

9’000

0

(488)

(320)

(71’500)

(488)

8’680

1.4.2019

Cash flows
Inflow

Cash flows(Outflow)

8’000

72’500

168

0

8’168

72’500The management assessed that fair value level of all financial assets and liabilities approximate their book value.
The Group enters into derivative transactions such as currency risk reversal and forward contracts to hedge the USD, EUR and
JPY risks. The purpose of these currency hedges is to manage the currency risks arising from the Group’s operations.
It is the Group’s policy that no derivatives for speculative purposes shall be entered into.
The main risks arising from the Group’s financial instruments are foreign currency risks and credit risks, whereas the others areof minor or no impact. The Board of Directors reviews and agrees policies for managing each of those risks.

Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived from prices).
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

Sensitivity analysis for currency risk
The sensitivity analysis is performed per 31 March 2020 with a 5 % change in the USD, EUR, JPY, CNY and GBP with all othervariables held constant of the Group’s profit before tax (due to the changes in the fair value of the monetary assets and liabilities) and the Group’s equity. The sensitivity analysis performed for the financial year shows an impact of CHF ±989 thousand
for a ±5 % EUR rate change (CHF ±788 thousand per 31 March 2019), of CHF ±557 thousand for a ±5 % USD rate change (CHF
±561 thousand per 31 March 2019), of CHF ±1’053 thousand for a ±5 % CNY rate change (CHF ±1’130 thousand per 31 March2019) and of CHF ±153 thousand for a ±5 % JPY rate change (CHF ±127 thousand per 31 March 2019). For other currencies,
there is no significant impact. There is no significant impact on the Group’s equity.
Credit risk
Credit risk is the risk that a financial loss occurs if a counterparty is unable or unwilling to fulfill its contractual payment obligation.
The Group trades with recognized and creditworthy parties. The accounts receivable are monitored on a monthly basis.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.
In case of a deterioration of the credit history, advance payments are required. The Group’s exposure to bad debts is not significant. The maximum exposure is the carrying amount as disclosed in note 5. There are no significant concentrations of risk
within the Group. With respect to credit risk arising from the other financial assets in the Group, which comprises cash and cash
equivalents, other current assets and certain derivative instruments, the Group’s exposure to credit risks arises from default of
the counterparty, with a maximum exposure equal to the carrying amount of these positions.
Liquidity risk
The Group operates a cash-pooling agreement in which cash targets are set for all the subsidiaries. Cash surplus / shortages are balanced in intercompany loans on a monthly basis. Group capital requirements are managed centrally by corporate
finance. In case liquidity is required a bank loan is either taken-up centrally and passed on as an intercompany loan, or given
directly by the bank to the subsidiary with a reduction of the Group’s total credit line. The total leverage of the Group is low, thefinancial liabilities mature in less than one year based on the carrying value of borrowings reflected in the financial statements.

31.3.2020
Fair value

In CHF thousands

The Group’s financial assets at fair value amount to CHF 320 thousand per 31 March 2020 (financial liabilities of CHF 168 thousand per 31 March 2019), all classified under Level 2.
During the two last reporting periods, there were no transfers between Level 1 and Level 2 fair value measurements, and notransfers into and out of Level 3 fair value measurements.

31.3.2019
Fair valueLess than
one yearOver oneyear

Accounts payable

22’11622’1160

22’76022’760025’33125’331

0

26’04726’047

0

0

0

0

168

168

0

Other current financial liabilities

Derivative financial instruments – current

9’000

9’000

0

8’000

8’000

0

Lease liabilities 1

2’392

2’392

0

0

0

0

Noncurrent lease liabilities 1

5’678

0

5’678

0

0

0

0

0

0

14

0

14

64’517

58’8395’678

56’98956’97514

Total
1 Undiscounted lease liabilities

Page 36

Over oneyear

Accrued expenses

Other noncurrent financial liabilities

LEM Financial Report 19 | 20

Less than
one year

LEM Financial Report 19 | 20

Page 37

Notes to the consolidated
financial statements

Auditor’s report

Interest rate risk
The Group’s exposure to the risk of changes in market interest rates with the current financial leverage is low. Per 31 March
2020, the bank credit line amounts to CHF 9 million.

Statutory auditor’s report on the audit of the consolidated financial statements

Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a healthy and stable equity ratio in order
to secure the confidence of shareholders and investors, creditors and other market players and to strengthen the future development of the Group’s business activities.
The Group manages its capital structure and makes adjustments to it, in light of changes in the economic conditions.
LEM targets a payout ratio significantly above 50 % of the consolidated net profit for the year.
However, it may diverge from this policy due to economic prospects or on the grounds of planned future investment activities.
26. Scope of consolidation
Full consolidation

Country

Currency

Share capital

Ownership

EuropeLEM Europe GmbHGermany

EUR

75’000100 %LEM HOLDING SA

Switzerland

CHF

570’000

100 %LEM International SA

Switzerland

CHF

100’000

100 %LEM Intellectual Property SA (“in liquidation”)

Switzerland

CHF

300’000

100 %LEM Switzerland SA

Switzerland

CHF

1’000’000

100 %LEM Management Services SARL

Switzerland

CHF

20’000100 %LEM Advisory Services SA

Switzerland

CHF

100’000

100 %LEM Tech France SAS

FranceEUR

50’000100 %LEM Bulgaria EOOD

Bulgaria

BGN

1’971’000

100 %LEM Russia Ltd

RussiaRUB

16’400’000

100 %North America
LEM USA Inc.

USA

USD

150’000

100 %LEM Electronics (China) Co. Ltd

China

CNY

204’495’594

100 %LEM Japan KK

Japan

JPY

16’000’000

100 %Malaysia

MYR

200’000

100 %

Asia

LEM Malaysia SDN, BHD

27. Changes in scope of consolidation
On respectively 5 and 13 December 2019, LEM Advisory Services SA and LEM Malaysia SDN, BHD have been incorporated.
From 2 January 2020, LEM Intellectual Property SA is in liquidation.

OpinionWe have audited the consolidated financial statements of LEM Holding SA and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as at 31 March 2020 and the consolidated statement ofincome, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including asummary of significant accounting policies.
In our opinion, the consolidated financial statements (pages 5 to 38) give a true and fair view of the consolidated
financial position of the Group as at 31 March 2020, and its consolidated financial performance and its consolidated
cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply
with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss AuditingStandards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss
audit profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our otherethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our auditof the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide aseparate opinion on these matters. For each matter below, our description of how our audit addressed the matter isprovided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report, including in relation to these matters. Accordingly, our audit included theperformance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address
the matters below, provide the basis for our audit opinion on the consolidated financial statements.

28. Events after the balance sheet date
There were no events subsequent to the balance sheet date that require adjustment to or disclosure in the financial statements.

LEM Financial Report 19 | 20

Page 38

LEM Financial Report 19 | 20

Page 39

Auditor’s report

Auditor’s report

Uncertainties regarding Income taxes and transfer pricing

Responsibility of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a trueand fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of consolidated financial statements that are free frommaterial misstatement, whether due to fraud or error.

Area of focus
The Group operates in multiple jurisdictions with complex legal and tax regulatory environment that are constantly changing and require more compliance efforts. The country-specific tax risks could result in potential material
amounts payable.
Management monitors these tax risks primarily at corporate level, including the significant level of estimations andjudgments made with respect to the likelihood and magnitude of these risks. In certain of these jurisdictions, theGroup has taken tax position on income taxes and transfer pricing that management believes are supportable. Dueto the significance of the deferred tax balances and other tax positions and the judgment involved in determining
these, this matter was considered significant to our audit. Refer to notes 20 to the consolidated financial statements for further information.
Our audit response
Our procedures included, amongst others, assessing the tax rules in the various jurisdictions in which the Company operates and assessing the management’s assumptions and estimates in relation to uncertain tax positions,current income tax and deferred taxes.
We involved our tax specialists to assist in assessing the Company’s tax methodologies and analyzing the underlying key assumptions, including the advice received by management from external parties to support their position.
We audited the current year tax provision, the Company’s reconciliation of book to taxable income, as well as thedeferred tax balances and evaluated whether the assumptions applied by management on the recoverability of deferred tax assets is consistent with its budget and forecasts. Our audit procedures did not lead to any reservations
regarding income taxes and transfer pricing.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located at
the website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-report-for-public-companies. This description
forms part of our auditor’s report.

Other information in the annual report
The Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, thestand-alone financial statements and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the annual report and, in doing so, consider whether the other information is materially inconsistent withthe consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.

LEM Financial Report 19 | 20

Page 40LEM Financial Report 19 | 20

Page 41

Auditor’s report

Corporate governancereportReport on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal
control system exists, which has been designed for the preparation of consolidated financial statements according
to the instructions of the Board of Directors.

The following information complies with the Corporate Governance Directive of the SIX Swiss Exchange (SIX) and the disclosure rules of the Swiss Code of Obligations. In order to enhance the clarity of this chapter, reference is made to otherparts of this Financial Report and our website (www.lem.com). Key elements are contained in the Articles of Incorporation.

We recommend that the consolidated financial statements submitted to you be approved.
To the General Meeting of LEM Holding SA, Fribourg
Lancy, 15 May 2020
Ernst & Young Ltd

Roland Ruprecht
Licensed audit expert(Auditor in charge)

Victoria Napoly
Licensed audit expert

1.
Group structure and shareholders
Group structure
LEM HOLDING SA is domiciled at Avenue Beauregard 1, CH-1700 Fribourg. LEM’s registered shares are listed on the main segment of the SIX Swiss Exchange (LEHN, security no. 2 242 762; ISIN 0022427626). On 31 March 2020, the market capitalization
was CHF 1’211 million. LEM Group is structured into Industry and Automotive segments. Appropriate segment reporting pursuant
to IFRS is contained in note 3 of the consolidated financial statements. All companies in LEM Group are listed under “Scope of
consolidation” in note 26 of the consolidated financial statements, with their respective company names, registered offices,
share capitals and the relevant percentages of shares held. There are no other listed companies in the scope of consolidation.
Significant shareholders
The following shareholders held 3 % or more of the share capital and voting rights:

31.3.2020
In %SharesIn %Werner O. Weber and Ueli Wampfler, in Zollikon/Wollerau,
Switzerland, through WEMACO Invest AG and Swisa
Holding AG, in Zug/Cham, Switzerland

582’700

51.1 %

574’500

50.4 %

Ruth Wertheimer, in Kfar Shmaryahu, Israel, through7-Industries Holding B.V., in Amsterdam, Netherlands

100’081

8.8 %141’58112.4 %

Invesco, Atlanta, U.S.A.

36’883

3.2 %

0

0.0 %

J. Safra Sarasin Investmentfonds AG, Basel, Switzerland

36’0003.2 %36’000

3.2 %Columbia Threadneedle, London, United Kingdom

26’6952.3 %48’142

4.2 %Total shareholders < 3 %384’33633.7 %

339’777

29.8 %

1’140’000

100.0 %

1’140’000

100.0 %

Total

Shareholdings of
non-executive Directors

Page 42

Shareholdings of
Executive Management
31.3.2020
Number ofshares held

31.3.2019
Number ofshares held

Andreas Hürlimann

1’001

1’001

François Gabella

600

600

Ilan Cohen

300

300

Frank Rehfeld, CEO0070’70069’500Andrea Borla, CFO

00Ulrich Jakob Looser

100

100

Werner C. Weber

0

0

Total

72’70171’501LEM Financial Report 19 | 20

Page 43

Ueli Wampfler

LEM Financial Report 19 | 20

31.3.2019

SharesIn number of shares, per cent of shareholding

31.3.2020
Number ofshares held

31.3.2019
Number ofshares held

Rebecca Cullinan, SVP Industry

00Rainer Bos, SVP Automotive

0

0

Total

0

0

Corporate governancereportPosition
Chairman of the Board of Directors,
Chairman of the Strategy Committee,
Member of the Nomination andCompensation Committee– Since 2011, Entrepreneur

Nationality Swiss
Born in 1964

– Sobrado Software AG, Cham, Chairman of the Board of Directors– ElectricFeel AG, Zürich, Member of the Board of Directors– themissinglink ag, Cham, Member of the Board of Directors

Professional backgroundThe notifications which have been sent to the Company and the disclosure office of the SIX Swiss Exchange AG during thefinancial year pursuant to article 120 of the Federal Act on Financial Market Infrastructures and Market Conduct in Securities
and Derivatives Trading may be viewed via the search function on https://www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html/.

– Condis SA, Rossens, Member of the Board of Directors– Novo MOF AG, Villigen, Member of the Board of Directors

Entry
2011

Andreas Hürlimann

Other notable activities– 2005 – 2010, Managing Director,
Spencer Stuart, Zürich
– 1999 – 2005, Global Director of Industry
Practices and Member of the Executive
Board, Arthur D. Little Inc., Zürich,
Lisbon, London and Paris– Sustainable Real Estate Investments SICAV, Zürich, Chairman of theBoard of Directors– Steiner Investment Foundation, Zürich, Member of the Board ofTrustees
Education– M. Sc. Electrical Engineering, ETH Zürich, Switzerland– DAS Finance, University of Zürich, Switzerland– 1990 – 1999, international business development, sales and management roles
with Siemens Schweiz AG, ABB Power
Generation AG and Oerlikon Aerospace
Inc., Zürich, Baden, Montréal

The trading of LEM shares by both Board of Directors and Executive Management has to respect LEM’s disclosure and insider
trading policy as well as all applicable rules and legislation.
Cross-shareholdings
LEM has no cross-shareholdings with other joint-stock companies.

2.
Capital structure
Capital and shares
The nominal value of the share capital of LEM HOLDING SA is CHF 570’000, which is divided into 1’140’000 fully paid-up registered shares with a par value of CHF 0.50 each. No changes of the total share capital have occurred during the last 3 years.
There are no shares with preferred voting rights. All shareholders are entitled to the same dividends. There are no restrictions
on the transfer of shares. In order to be registered in the share register, each shareholder shall declare that he/she holds theshares for their own account.
On 31 March 2020, LEM HOLDING SA held 556 treasury shares.
Authorized and conditional capital
There is no authorized or conditional capital, nor are there any profit-sharing certificates or participation in certificates or any
convertible bonds outstanding.

Page 44– Economie Suisse, Member of the Bord, Zürich

Professional background– Switzerland Global Enterprise, Zürich,Member of the Advisory Board

François Gabella– Vice President of Swissmem, Zürich
– Optotune AG, Dietikon, Member of the Board of Directors,– 2002 – 2006, SVP, Areva– 1996 – 2002, Business Area Manager,
ABB Power Transformers– Fischer Connectors SA, Saint-Prex,
Member of the Board of Directors– Sonceboz SA, Sonceboz, Member of the Board of Directors– Sensirion AG, Stäfa, Member of the Board of Directors– Nextlens AG, Dietikon, Member of the Board of Directors

Nationality Swiss
Born in 1958

Education– M. Sc. Microtechnics EPFL, Lausanne, Switzerland– MBA IMD, Lausanne, Switzerland

Position
Member of the Board of Directors,
Member of the Strategy Committee
Entry
2010
– Since 2019, Chairman of Caja Robotics

Ilan Cohen
Nationality Israeli
Born in 1956

– 2009 – 2019, President, Servotronix
Motion System Ltd.
– 2008 – 2009, General Manager, Kollmorgen Industrial & Commercial Engineered
Solutions Ltd. (Danaher Group)– 1997 – 2008, President and CEO,Kollmorgen Servotronix Ltd.
– 1987, Founder, Servotronix Ltd.
– 1983 – 1990, Associate professor,
University of Tel Aviv, Israel

LEM Financial Report 19 | 20

Other notable activities– EZReider, Israel, Member of the Board of Directors– Negba Houses for Children at Risk in Israel, Chairman of the Board
Education

Professional background

The Board of Directors was comprised of the following members as of 31 March 2020:

LEM Financial Report 19 | 20

Entry
2018

– 2006 – 2010, CEO, Tesa SA

At the Annual General Meeting on 27 June 2019, Andreas Hürlimann, François Gabella, Ilan Cohen, Ueli Wampfler, Ulrich J.
Looser and Werner C. Weber were re-elected as members of the Board of Directors. Andreas Hürlimann was re-elected as
Chairman of the Board of Directors. In addition, shareholders elected Andreas Hürlimann and Ulrich J. Looser to the Nomination& Compensation Committee (NCC). Ulrich J. Looser chairs the Committee.

Ilan Cohen was President of Servotronix Motion Control Ltd until end of 2019, which has bought sensors for CHF 968 thousandin 2019/20 (CHF 897 thousand in 2018/19), including purchases done by its subsidiaries and subcontractors, from LEM Groupat market price. No other member of the Board of Directors has any significant business connection with LEM Group.

Other notable activities– 2010 – 2018, CEO, LEM Group

3.
The Board of Directors’ election, terms of office and cross-involvement
The Board of Directors is comprised of at least three members who are individually elected at the Annual General Meeting fora mandate of one year, which is renewable up to an age limit of 70. The Board of Directors constitutes itself, except for the
Chairman of the Board of Directors and the members of the Compensation Committee who are elected by the Annual General
Meeting of Shareholders.

All members of the Board of Directors are non-executive. Only François Gabella had been part of the Executive Management of
LEM before his election as member of the Board of Directors.

Position
Member of the Board of Directors

Page 45– Ph.D. Control System, Ecole Polytechnique de Bruxelles, Belgium– MSEE, CALTECH Pasadena, USA– M.Sc. and BSEE Electro-mechanical engineer,
Ecole Polytechnique de Bruxelles, BelgiumPosition
Member of the Board of Directors, Chairmanof the Nomination and Compensation
Committee, Member of the Audit and Risk
Committee
Entry
2015

Nationality Swiss
Born in 1957

– Since 2009, Berg Looser Rauber &Partner (BLR&Partners)– 2001 – 2009, Accenture, various
positions including Managing Director
Austria/Switzerland/Germany Management Consulting and Chairman Accenture
AG (Switzerland)– 1987 – 2001, McKinsey & Company, industry, energy, pharma and public sector
practices, partner election 1993

Ueli Wampfler
Nationality Swiss
Born in 1950

– u-blox AG, Member of the Board of Directors– Spross Entsorgungs Holding AG, Member of the Board of Directors– University of Zürich, Member of the University Council– Economiesuisse, Member of the Board– University Hospital Balgrist, Member of the Board– Swiss-American Chamber of Commerce– Swiss National Science Foundation– Member of the Executive Committee of the Foundation Council
Education– M.Sc. Physics, ETH Zürich, Switzerland– M.A. HSG, University of St. Gallen, Switzerland

Other notable activities

Entry
2007

– Arcotempo Holding AG, Cham, Chairman of the Board of Directors– Swisa Holding AG (Swisa Group), Cham,
Chairman of the Board of Directors

Professional background– Merbag Holding AG (Merbag Group), Cham,
Vice Chairman of the Board of Directors– Since 2004, Founder and Senior Partner,
Wampfler & Partner AG, Zürich

– Caspar Finanz AG (Traco Power Group), Baar,
Member of the Board of Directors– 1998 – 2004, Director, STG Schweizerische Treuhandgesellschaft, Zürich

– Rebew AG, Zürich, Member of the Board of Directors– 1974 – 1998, STG Coopers & Lybrand,
Zürich (Partner since 1991)– Lic. oec., University of Zürich, Switzerland

Entry
2017
– Since 1998, weber schaub & partner ag,
Partner– Prior thereto in particular Freddy Burger
Management Group in Zürich as LegalCounsel and General Secretary, andPricewaterhouseCoopers AG in Zürich as
Legal and Tax Counsel

External mandates
Pursuant to Article 31 of the Articles of Incorporation, members of the Board of Directors may not hold more than ten additional
mandates of which no more than four may be in listed companies. The following mandates are not subject to the above limitations: (a) mandates in companies which are controlled by LEM or which control LEM; (b) up to five mandates held at the requestof LEM or companies controlled by it; and (c) up to six mandates in associations, charitable organizations, foundations, trusts
and employee welfare foundations. Mandates shall mean mandates in the supreme governing body of a legal entity, which is
required to be registered in the commercial register or a corresponding foreign register. Up to 20 mandates in different legal
entities which are under joint control or same beneficial ownership are deemed one mandate.
Internal organizational structure
The Board of Directors meets as often as necessary, but six annual meetings are planned in advance. In the completed financial year, six full-day meetings were held. The meetings usually take place at the Company’s registered office in Fribourg. The
Chairman, after consulting with the CEO and the Chairmen of the committees, determines the agenda for the Board meetings.
The members of the Board of Directors can ask for additional items to be included on the agenda. They receive supporting documents beforehand, allowing for a comprehensive preparation of the meeting. As a rule the CEO and CFO attend the meetingsof the Board of Directors without having a right to vote. Depending on the topics, other members of Executive Management
participate in the meetings in order to respond to specific questions. Decisions can be taken by the Board of Directors if at least
half of the Directors are present, and a simple majority of them is sufficient. In the event of tie, the Chairman has the casting
vote. Minutes of the meetings including decisions taken are prepared by the CFO and distributed to the members of the Boardof Directors, the CEO and the CFO.

Education– Certified auditor

The Board of Directors reviews its working procedures, the efficiency and effectiveness of its teamwork as well as its interaction with the Management of the Company on a regular basis. Regular feedback sessions at the end of a meeting provide
valuable inputs for the continuous improvement of the Board’s coherence and leadership.

Other notable activities

Definition of areas of responsibility
The Board of Directors delegates the management of the Company to the CEO to the fullest extent permitted by the Swiss Codeof Obligations. The Board of Directors reviews and assesses at least on an annual basis and takes decisions in the following
areas:– review and approval of the strategy, business plan, annual business objectives and budget for the LEM Group;– approval of creation/closing of any subsidiary and purchase/sale of any interest in any company or entry into any merger
or joint venture agreement;– appointment/dismissal of the Executive Management;– monitoring the ethical and legal behavior of LEM;
– review of human resources management, including employee satisfaction and management development and legal,
intellectual property, social and environmental aspects.

– WEMACO Invest AG, Zug, Member of the Board of Directors– weber schaub & partner ag, Zürich,Member of the Board of Directors– Arosa Bergbahnen AG, Arosa, Member of the Board of Directors

Professional background

Nationality Swiss
Born in 1960

– Kardex AG, Member of the Board of Directors

Position
Member of the Board of Directors, Chairmanof the Audit and Risk Committee

Position
Member of the Board of Directors,
Member of the Strategy Committee

Werner C. Weber– Straumann Holding AG, Member of the Board of Directors(until 7 April 2020)

Corporate governancereport– Bachofen Holding AG, Chairman of the Board of Directors

Professional background

Ulrich J. Looser

Other notable activities– Schilthornbahn AG, Lauterbrunnen,
Member of the Board of Directors– City Parkhaus Aktiengesellschaft, Zürich,Member of the Board of Directors– MedioSearch AG, Bern / SkySmile AG, Zürich,Member of the Board of Directors
Education– Dr. iur. University of Zürich, Switzerland– Admitted as an attorney-at-law in Zürich, Switzerland– Mediator SBA, Zürich, Switzerland

LEM Financial Report 19 | 20

Page 46

LEM Financial Report 19 | 20

Page 47

Corporate governancereportCorporate governancereportInformation and control systems of the Board of Directors vis-à-vis Executive Management
The Board of Directors ensures that it receives sufficient information from the Management to perform its supervisory duty andto make the necessary decisions.
The Board of Directors obtains the information required to perform its duties through several means:– the Board of Directors receives monthly and quarterly reports on the current development of the business;– informal meetings and teleconferences are held as required between the Chairman and the CEO as well as between
the Chairman and individual members of the Board of Directors;– the Committees meet at regular intervals and exchange detailed information with the Executive Management;– the Board of Directors receives detailed information to each agenda item one week before the Board meeting;– each Executive Manager joins at least one but usually multiple Board sessions in any given year.

Committees
Three standing committees support the Board of Directors. They are comprised of at least two non-executive members of theBoard of Directors. They meet whenever necessary but at least twice a year.

Business risk management
In compliance with Swiss law, LEM is using a standardized procedure to analyze its business risks. LEM’s risk management
covers all types of risk: financial, operational and strategic – including the external business environment, compliance andreputational aspects.
The Executive Management conducts an annual risk analysis. The results and consecutive action plans are thereafter presented to and formally approved by the Board of Directors.
The risk management approach follows five steps: in a first step, potential hazards are evaluated and a consolidated list with
5 to 10 main hazards is set up. In a second step, each hazard is assessed by a product of probability and quantified impact.
Step two results in a risk map, which visualizes LEM’s potential risk environment. In step three, an action plan is put in place tomitigate the risks. The hazards thereafter are revalued a second time, taking into consideration the mitigation measures. In step
four, the action plan is validated and thereafter monitored on a bi-annual basis (step five).
Internal control system
In compliance with Swiss law, LEM has put in place an internal control system.

– The primary objective of the Audit & Risk Committee (ARC) is to provide the Board of Directors with effective support in financial matters, in particular the selection and supervision of the external auditor, assessment of the effectiveness, complianceand clarity of the Group financial reporting and the assessment and preparation of the financial reports to the shareholders.
Furthermore, it reviews critical accounting policies, financial control mechanisms and compliance with corresponding laws
and regulations as well as the development and continuous improvement of the internal control system. If required, the external Group auditors are invited to participate at the meeting. The ARC prepares proposals to be decided by the Board of
Directors. In the completed financial year, three half-day meetings were held.
– The Nomination & Compensation Committee (NCC) deals with succession, recruitment and compensation of the membersof the Board of Directors and the Executive Management. It ensures and monitors the personnel development plan and adequate succession planning for the middle and top management. It supports the Board of Directors in establishing and reviewing the compensation strategy and guidelines and the performance objectives as well as in preparing the proposals to besubmitted to the General Meeting regarding the compensation of the Board of Directors and of the Executive Management. It
reviews and updates the compensation policy for the members of the Board of Directors and the Executive Management andthe performance-based compensation system for the Executive Management. The NCC prepares proposals to be decided
by the Board of Directors. In the completed financial year, four half-day meetings and two telephone conferences were held.
– The primary objective of the Strategy Committee (SC) is to assist the Board of Directors in fulfilling its duties with respect todetermining the Company’s strategy and the appropriate means to pursue it, including LEM’s organizational setup. As strategic work and its successful implementation is based upon coordinated and interlocking activities between Executive Management and the Board of Directors, the SC ensures close collaboration with the CEO and the Executive Management. The
SC prepares proposals to be decided by the Board of Directors. The Board of Directors may also decide to delegate membersof the SC to assist in steering longer-term strategic initiatives by joining the project steering committee. In the completed
financial year, five half-day meetings and one telephone conference were held.

Starting from the material positions in the annual financial results, the important underlying processes and process owners
have been identified. For each process, key risks that could lead to errors in the financial reporting have been identified. For
each key risk, key controls have been defined and responsibilities assigned to assure effective compliance and documentationof the key controls. The process has been presented to and approved by the Audit & Risk Committee.
Looking forward, the process owners will perform an annual process review whereby identified weaknesses shall be continuously improved and key risks and controls shall be updated. Based on the input of the process owners, the CFO prepares anannual report on the internal control system, which is presented to and discussed with the Audit & Risk Committee.

LEM Financial Report 19 | 20

Page 48

LEM Financial Report 19 | 20

Page 49

Corporate governancereportFrank Rehfeld

Andrea Borla

Rebecca Cullinan

Rainer Bos

4.
Executive Management
The Executive Management was comprised of the following members as of 31 March 2020:

Frank Rehfeld
Nationality German
Born in 1968

Function
CEO LEM Group

Previous companies and positions

With LEM since2016– 2009 – 2015, VP Drives, Brose China Co., Ltd.

– 2016 – 2018, SVP Industry, LEM Group– 2006 – 2009, Managing Director, Hella Shanghai Electronics Co., Ltd.
– 2004 – 2006, Siemens VDO China, Director Body/Chassis Electronics– 1996 – 2004, Siemens VDO Germany, Director R&D Body/Chassis Electronics
Education– Dipl. Eng. Electrical Engineering, Erlangen-Nuremberg, Germany

Andrea Borla
Nationality Swiss
Born in 1967

Function
CFO LEM Group

Previous companies and positions

With LEM since2015– 2003 – 2007, Field Operations Manager, Schindler China– 2008 – 2015, CFO, Schindler France

Education– Ph.D., M.A. HSG, Finance and Accounting, St. Gallen, Switzerland

Nationality British
Born in 1970

Function
Senior Vice President
Industry

Previous companies and positions

With LEM since2019– 2015 – 2018, Managing Director, South East Asia, Valeo– 2018 – 2019, Managing Director, South Europe, Middle East & Africa,
Automotive Lighting/Magnetti Marelli– 2002 – 2015, Various Management Position, France, Valeo– 1998 – 2002, Senior Consultant, UK, IHS Global Insight
Education– MBA University of Westminster UK, BSc in Mechanical Engineering,
Jiangsu University China

Rainer Bos
Nationality German
Born in 1962

Function
Senior Vice President
Automotive

Previous companies and positions

With LEM since2015– 1991 – 1999, Key Account Manager, Continental-Teves KGaA

– 2011 – 2015, General Manager, Amphenol Tuchel Electronics GmbH
– 2001 – 2011, Business Unit Director, Delphi Deutschland GmbH
Education– Dipl. Eng. Industrial Engineering, TU Darmstadt, Germany

LEM Financial Report 19 | 20

Page 50External mandates
Pursuant to Article 31 of the Articles of Incorporation, and subject to approval by the Board of Directors, members of the Executive Management may not hold more than three additional mandates of which no more than one may be in listed companies.
The following mandates are not subject to the above limitations: (a) mandates in companies which are controlled by LEM or
which control LEM; (b) up to five mandates held at the request of LEM or companies controlled by it; and (c), subject to approval by the Board of Directors, up to three mandates in associations, charitable organizations, foundations, trusts and employee
welfare foundations. Mandates shall mean mandates in the supreme governing body of a legal entity, which is required to beregistered in the commercial register or a corresponding foreign register. Up to 20 mandates in different legal entities which
are under joint control or same beneficial ownership are deemed one mandate.
Management contracts
There are no management contracts with companies or individuals outside LEM Group.

5.
Compensation
Please refer to the compensation report on page 53.

– 1999 – 2003, Area Controller, Schindler Asia Pacific– 1996 – 1999, Head of Group Consolidation, SAirGroup

Rebecca Cullinan

None of the members of the Executive Management have other activities in governing or supervisory bodies, any official functions or political posts nor any permanent management functions for important Swiss and foreign interest groups.

6.
Shareholders’ participation rights
The rules on shareholders’ participation rights are outlined in the Articles of Incorporation. The rules for the convening of General Meetings, the participation rights and the majority rules for decisions all follow Swiss law. The complete Articles of Incorporation can be downloaded from the Investor Relations pages on the website. https://www.lem.com/en/file/2817/download
Voting rights and representation restrictions and inscription in the share register
There are no limitations on voting rights for shareholders who are entered into the shareholders’ register with voting rights.
Anyone purchasing registered shares is registered by the Board of Directors in the share register on request as a shareholder
with voting rights, provided he/she expressly declares that the shares have been bought and will be held for their own account.
Each shareholder may be represented by the independent representative or by a third party who need not be a shareholder
of LEM HOLDING SA.
Statutory quorums
The Articles of Incorporation contain no deviation from the applicable law. In case a second vote is necessary for elections, arelative instead of the absolute majority of the votes represented is required.
Convocation of the General Meeting of the Shareholders
Registered shareholders are convened to General Meetings by ordinary mail and by publication in the Swiss Official Gazette ofCommerce at least 20 calendar days prior to the day of the meeting.
AgendaAccording to Article 12 of the Articles of Incorporation, one or several shareholders who collectively hold 10 % of the sharecapital can call for a shareholders’ meeting and submit matters to be placed on the agenda.

LEM Financial Report 19 | 20

Page 51

Corporate governancereportCompensation report

Dividend policy
LEM targets a payout ratio significantly above 50 % of the consolidated net profit for the year, to be proposed by the Board of
Directors to the Annual General Meeting.

The future of LEM depends on our ability to attract, develop and retain talented people. Among the many measures
we use to achieve this goal are competitive remuneration policies. Our compensation policies are designed to alignthe interests of Executive Management and the Board of Directors with the interest of Shareholders.

7.
Change of control and defensive measures
Opting-out clause
Any shareholder is released from the obligation to submit a public takeover offer to all shareholders if his participation in LEM
exceeds 33 1/3 % of the voting rights.
Clauses on changes of control
There is no particular clause in the Articles of Incorporation for changes of control. No member of the Executive Management
will receive additional severance payments if dismissed in the case of a change of control of the Company.

8.
Auditors
The duration of the auditors’ mandate is one year. Ernst & Young has been auditing LEM since the financial year 2005/06, with
Roland Ruprecht bearing the responsibility for the audit since 2018/2019. As required by law, the auditor-in-charge is changed
every seven years. Ernst & Young audits the Group’s consolidated financial statements as well as the majority of LEM’s Group
companies in Switzerland and abroad. The audit fees and fees for additional services are as follows:
Type of service
In CHF thousands

Audit fees
Additional fees
Total

2019/20

2018/19

363

361

0

0

363

361

The Audit Committee evaluates and controls the performance (focus on areas that involve significant risk to LEM, ability toprovide effective and practical recommendations, open and effective communication and coordination), fees, and independence of the auditors each year. It discusses and reviews the scope of the audits, and the resulting feedback. Based on thisinformation, it determines which changes and improvements are necessary. The auditors report on the results of their audits
both orally and in writing. Financial statements as well as management letters are discussed in the ARC in the presence of theexternal auditors. During 2019/20 Ernst & Young attended two regular ARC meetings.

9.
Information policy
LEM informs its shareholders about the business status and its results on a quarterly basis in the form of press releases. These,
together with the Annual Review and Financial Report, are made publicly available on its website (http://www.lem.com/en/investors) and may be obtained in print from the company’s headquarters. Once a year, LEM holds a presentation for the media,
investors and financial analysts. Internal processes assure that price-sensitive facts are published without delay in accordancewith the ad hoc publicity rules of the SIX Swiss Exchange. At www.lem.com, detailed information is available, e.g., the Articles ofIncorporation, interim and annual reports, investor presentations, press releases as well as the financial calendar.
Contact for investors and media: Andrea Borla, CFO, Chemin des Aulx 8, CH-1228 Plan-les-Ouates, or send an e-mail toinvestor@lem.com (phone: +41 22 706 12 50).

LEM Financial Report 19 | 20

Page 52

In brief
Core principles
LEM’s compensation policies are designed to reward results and performance as well as to create long-term value for Shareholders. The compensation policies are reviewed on an annual basis.
LEM’s Articles of Incorporation (www.lem.com/en/Investors > Corporate Governance) contain provisions regarding the approvalof compensation of the Board of Directors (BoD) and the Executive Management (Article 27), the supplementary amount for
new members of the Executive Management (Article 28), the general compensation principles (Article 29) as well as provisions
regarding the agreements with members of the Board of Directors and the Executive Management (Article 30).
The Compensation Report is based on section 5 of the annex to the Corporate Governance Directive issued by SIX Swiss Exchange and Art. 13 to 17 of the Ordinance Against Excessive Compensation in Listed Stock Companies (OaEC).
Compensation of the Board of Directors
The compensation of the Board of Directors consists exclusively of a fixed fee paid in cash. There is no variable compensation.
The compensation of the Chairman and the members of the Board of Directors depends on the responsibility of each member
and the related work such as Committee activity.
Compensation of the Executive Management
In order to encourage and reward results that contribute to the sustainable success of LEM, the total compensation of the
Executive Management consists of three elements: base salary, variable compensation and non-wage compensation. The
target-setting process for the variable compensation is carried out on an annual basis and includes quantitative and qualitative
performance criteria, including LEM’s financial results.
The members of the Executive Committee are entitled to attend the Board meetings relevant to their function but are excluded
from any deliberation and decision on their compensation. The compensation authorities are summarized in the following table:
Beneficiary

Compensation element

ProposalApproval

BoD and Executive Management

Compensation principles

NCC

BoD within limits of articles
of association

BoD

Aggregate maximum amount
fixed compensation

BoD based on NCC proposal

Annual General Meeting(prospective approval)

BoD

Individual compensation

NCC

BoD

Executive Management

Aggregate maximum amount
fixed annual base salary

BoD based on NCC proposal

Annual General Meeting(prospective approval)

Executive Management

Aggregate amount short-term
incentive

BoD based on NCC proposal

Annual General Meeting(retrospective approval)

Executive Management

Aggregate maximum amountlong-term incentive

BoD based on NCC proposal

Annual General Meeting(prospective approval)

Executive Management

Individual compensation

NCC based on proposal from CEO

BoD

CEO

Individual compensation

Chairman of the BoD

BoD

LEM Financial Report 19 | 20

Page 53

Compensation report

Compensation report1.
Board of Directors
1.1
General principles for compensation of non-executive Directors
The compensation of the Board of Directors is approved by the Annual General Meeting upon proposal by the Board of Directors
based upon recommendation from the NCC. The remuneration of the Board of Directors consists of a fixed cash payment andis reviewed on an annual basis. The remuneration compensates for the personal responsibility and exposure as a non-executive
member of the Board of Directors and the work related to the Board of Directors’ membership. There is neither a variable compensation nor any participation in an equity-based compensation plan.

2.
Executive Management
2.1 General principles for compensation of Executive Management
The aggregate remuneration of the Executive Management is approved by the Shareholders at the Annual General Meeting upon proposal by the Board of Directors. The proposals of the Board of Directors are based on NCC recommendation.
The remuneration of the Executive Management is reviewed on an annual basis.

1.2 Remuneration of non-executive Directors
The Board of Directors adopted a remuneration scheme with a fixed BoD membership fee paid in cash of gross CHF 250’000 for
the Chairman and CHF 80’000 for each member. Committee activity is compensated by membership fees of CHF 40’000 for theCommittee’s Chairman and CHF 20’000 for each member.
The tables below show the compensation per Board member in the financial years 2018/19 and 2019/20 for their term of office.
The Shareholders approved at the Annual General Meeting on 27th June 2019 a maximum compensation amount for the term ofoffice from the ordinary General Meeting 2019 until the ordinary General Meeting 2020 of CHF 1’100’000. The actual costs for theCompany are CHF 949’000.

2019/20
Annual fees (A)In CHF thousands

Total compensation

Taxes, social security
charges and similar
contributions (B)Andreas Hürlimann 1, 5, 6

310

310

27

337

120

120

11

131

140

140

13

153

Ilan Cohen 7, a

120

120

11

131

Werner C. Weber 7

100

100

9

109

François Gabella

80

80

7

87

Total

870

870

79

949

Annual fees (A)Total compensation

Taxes, social security
charges and similar
contributions (B)Total (A) + (B)337

Ulrich Jakob Looser

2018/19
In CHF thousands
1, 5, 6

310

310

27

120

120

11

131

Ulrich Jakob Looser 3, 4

140

140

13

153

Ilan Cohen 7, a

120

120

11

131

Werner C. Weber

80

80

7

87

François Gabella

80

80

7

87

Total

850

850

77

927

a including the amount of CHF 20’000 for R&D

4 Chairman of the Nomination & Compensation Committee

contribution
1 Chairman of the Board
2 Chairman of the Audit & Risk Committee
3 Member of the Audit & Risk Committee

5 Member of the Nomination & Compensation Committee

LEM Financial Report 19 | 20

6 Chairman of the Strategy Committee
7 Member of the Strategy Committee

Page 54

Instrument

PurposeDrivers

Range and cap

Shareholder approvalBase salaryMonthly cash
payments

Pay for the function

Scope and responsibilities, profile and competencies

N/A

Prospective maximum
amount (October –September)

Short-term incentive

Annual cash
payment

Pay for annual
performance

Business and individual
performance throughout the financial year

0 % – 139 % oftarget amount

Retrospective

Long-term incentive

Annual cash
payment

Participation in sustainable company success,alignment with
Shareholder interests

Achieved value creation
over three consecutive
financial years

0 % – 200 % oftarget amount

Prospective maximum
amount for payout
three years later

Non-wagecompensation

Pensioncontributions

Protect against risks
plus retirement anddependents’ coverage

Local legislation andmarket practice

N/A

The total compensation is in line with the market for comparable industrial companies considering the various remunerationlevels for different functions and locations. Furthermore, the compensation mix between base salary, variable compensationand non-wage compensation reflects sectorial and functional market practice. The full Board of Directors periodically reviews,
sets and approves the compensation system, based on the proposal of the Nomination & Compensation Committee. The latest
such review was performed in 2019 with support of Willis Towers Watson. The Global Grade factor has been used to define thepeer group, which allows comparability between companies based on revenues, number of employees, geographical scope,business complexity and diversity. No additional mandates were awarded to Willis Towers Watson.
2.1.1 Base salary of Executive Management
Base salaries are paid monthly as fixed cash amounts.

Ueli Wampfler 2

Andreas Hürlimann

Compensation element

Total (A) + (B)Ueli Wampfler 2
3, 4

The total compensation of the Executive Management is composed of the following elements:

2.1.2 Variable compensation of Executive Management
The target-setting process for the Leadership-for-Results (L4R) plan is part of the LEM performance management and is carried out on an annual basis by the NCC. All variable compensation is paid in cash and after approval by the Shareholders. The
Chairman of the BoD prepares objectives and performance evaluations for the CEO and the NCC for the other members of the
Executive Management based on personal performance review.
Short-term incentive related to the Executive’s function, responsibility and obtained results
Each Executive’s individual target amount for the short-term incentive plan is communicated to the Executive at the beginningof the financial year together with the objectives and their weighting. The target amount and the objectives are based on therole and impact of the Executive as well as annual company priorities. Objectives are linked to audited financial indicators suchas EBIT and Net Profit, other quantitative indicators as well as qualitative targets based on strategic initiatives. At the end of theyear, the performance on each objective is evaluated resulting in the total amount to be paid.

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Compensation report

Compensation report

The number of objectives is large enough to allow each Executive to reach a fair level of short-term variable compensation rewarding for the results achieved even under changed business conditions. Since the degree of achievement of set objectives
has to be evaluated at the end of the period, a clear understanding of the metrics to be applied is established at the time of target
setting and kept constant over the period. For each objective, the curve between minimum and maximum bonus level is defined.
Ambitious but achievable objectives are set as targets, at which 100 % of the respective target amount is attributed.

2.2 Remuneration of Executive Management

For Executive Management, the minimum payout of the short-term incentive is 0 % of the target amount and the weighted
maximum payout is 139 %. The target amount of the short-term incentive represents between 22 % and 29 % of the total target
compensation.
The short-term incentive payout is presented for retrospective approval to the Shareholders along with the Annual Report and thefinancial statements of the same financial year at the Annual General Meeting 2020 prior to being paid out.
Long-term incentive related to the sustainable financial performance of LEM GroupThe long-term incentive is defined as an annual target amount and is based on the performance of LEM evaluated over a periodof three consecutive financial years (2017/18 – 2019/20). The performance criterion is the cumulated Economic Value Added(EVA) over these three financial years. The Board of Directors defines the EVA objective at the beginning of year one and theevaluation of the performance takes place at the end of year three. Once the forward-looking EVA objective is defined, this EVA
objective remains unchanged over the three-year period.
For Executive Management, the minimum payout of the long-term incentive is 0 % of the target amount and the maximum payout is 200 %. The target amount of the long-term incentive represents between 11 % and 15 % of the total target compensation.
For the long-term incentive cycle 2017/18 to 2019/20, the maximum amount approved prospectively by the Shareholders at theAnnual General Meeting in 2017 is CHF 1’200’000 for payout in 2020.
2.1.3 Non-wage compensation of Executive Management
For Executive Management, non-wage compensation consists of pension plans (retirement benefits) only.
Executive Management benefits from LEM’s Swiss pension plan, considered a defined contribution plan under Swiss law thatprovides retirement benefits and risk insurance for death and disability. IFRS, on the contrary, considers this plan as a defined
benefits plan. The insured base salary follows Swiss professional pension regulations without limitation of the amount. The
pension fund is funded by contributions from the company and the insured Executive.

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2019/20

In CHF thousands

Base salary

Short-term
incentive

Long-term
incentive

Company’scontribution
to pension fundTotalcompensation

Company’scontribution tosocial security
chargesFrank Rehfeld, CEO

458

218

186

47

909

78

Executive management (excl. CEO) 1

796

387

298

83

1’564

133

1’254

605

484

129

2’473

211

Long-term
incentive

Company’scontribution
to pension fundTotalcompensation

Company’scontribution tosocial security
charges73

Total

1 Including Senior Vice President Industry (pro-rated 4.5 months)

2018/19

Base salary

Short-term
incentive

Frank Rehfeld, CEO

450

265

99

46

860

Executive management (excl. CEO)

620

256

170

66

1’112

94

1’070

521

269

112

1’972

167

In CHF thousands

Total

The amounts are shown as follows:– Base salary: as paid out in the reporting period– Short-term incentive 2019/20: as proposed to the Annual General Meeting on 9 June 2020 for payout in July 2020
– Long-term incentive: as accrued for or paid out during the reporting period– Pension fund contributions: as accrued for or paid during the reporting period– Company’s contributions to social security charges: as accrued for or paid during the reporting period

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Compensation report

Auditor’s report

Amounts approved by previous Annual General Meetings related to the period reported above:– Maximum amount base salary (for the period from 1 October 2018 to 30 September 2019):
CHF 1’800’000 (based on four Executive Management members)– Maximum amount base salary (for the period from 1 October 2019 to 30 September 2020): CHF 1’800’000– Short-term incentive amount for 2018/19 for payment in 2019: CHF 563’000– Maximum amount long-term incentive 2017/18 – 2019/20 for payment in 2020: CHF 1’200’000– Pension fund contribution and company contribution to social security charges as paid out or accrued for in the reporting
period are included in the above amounts.

Report of the statutory auditor on the compensation report

The overall variable remuneration paid-out for 2019/20 to the Executive Committee ranged from 41% to 50% of the total compensation.
2.3 Compensation of former members and related parties
In the financial year 2018/19, the former CEO François Gabella provided consulting services during the period from 1 April to
28 June 2018 for a total fixed compensation of CHF 30’000.
3.
Loans to current and former members of the Board of Directors and Executive Management and related parties
Our Articles of Association do not provide the basis to grant loans to current or former members of the Board of Directors,
the Executive Management or to any related party. Therefore, no loans have been granted in the financial years 2018/19 and2019/20 or in any previous year.

We have audited the compensation report of LEM Holding SA for the year ended 31 March 2020.The audit was limited
to the information according to articles 14–16 of the Ordinance against Excessive Compensation in Stock Exchange
Listed Companies (Ordinance) contained in the note 1.2 on pages 54 and on notes 2.2 to 2.3 on pages 57 to 58 of thecompensation report.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the compensation report inaccordance with Swiss law and the Ordinance. The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the compensation report. We conducted our audit in accordance with
Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the compensation report complies with Swiss law and articles
14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the compensation reportwith regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements inthe compensation report, whether due to fraud or error. This audit also includes evaluating the reasonableness of themethods applied to value components of remuneration, as well as assessing the overall presentation of the compensation report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
OpinionIn our opinion, the compensation report for the year ended 31 March 2020 of LEM Holding SA complies with Swiss law
and articles 14 – 16 of the Ordinance.
To the General Meeting of LEM Holding SA, Fribourg
Lancy, 15 May 2020
Ernst & Young Ltd

LEM Financial Report 19 | 20

Page 58

Roland Ruprecht
Licensed audit expert(Auditor in charge)

Victoria Napoly
Licensed audit expert

LEM Financial Report 19 | 20

Page 59

Balance sheet(before distribution of earnings)

LEM HOLDING SA

Assets
Notes

In CHF thousands

31.3.2020

31.3.2019

Current assets
Cash and cash equivalents

3’652

1’530

Loans to affiliated companies

66’29068’476

Current assets from affiliated companies

1’588

1’115

Other current assets

395

96

Total current assets

71’92571’217

Noncurrent assets
Investments in affiliated companies

68’191

67’989Total noncurrent assets

1

68’191

67’989Total assets

140’116139’206

31.3.2020

31.3.2019

Liabilities and equity
Notes

In CHF thousands

Current liabilities
Current financial liabilities

9’000

8’000

Loans from affiliated companies

14’91845’313

53

148

Other current liabilities

Current liabilities from affiliated companies

1’825

1’956

Total current liabilities

25’79755’417570

570

EquityShare capital2

Legal reserves
Free reserves– balance carried forward– profit for the year

Treasury shares

LEM Financial Report 19 | 20

Page 60285

36’061

8’571

77’98375’346

(581)

(983)

Total equity

114’319

83’789Total liabilities and equity

140’116139’206

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3285

Page 61

Income statement

Notes to thefinancial statements

IncomePrinciples for the establishment of the financial statements
The accompanying financial statements have been prepared in accordance with the requirements of the Swiss Code of Obligations. Regarding the inclusion of LEM HOLDING SA in the consolidated financial statements, the accounting and reporting
principles described in the notes to the consolidated financial statements apply.

In CHF thousands

Dividend from affiliated companies

Notes

2019/20

2018/194

76’08373’871

2’144

1’234

1’497

881

56

41

Interest income from affiliated companies
Foreign exchange gain

5

Other financial income
Other income from affiliated companies

6’150

6’343

Total income

85’93082’370LEM HOLDING SA does and did not have any employees.

1.

Investments in affiliated companies
31.3.2020

In CHF thousands

ExpenseIn CHF thousands

Office, administration and personnel expense

Notes

2019/20

2018/196(4’360)(3’337)

Financial expense
Foreign exchange loss

5

Total expense
Profit before taxes
Income taxes

7

Net profit for the year

(436)

(578)

(2’673)(2’728)(7’469)(6’642)78’46075’727

(477)

(382)

77’98375’34631.3.2019

Historical cost

68’191

67’989

Total

68’191

67’989The increase in investments in affiliated companies is linked to the following events during 2019/20:– incorporation of LEM Advisory Services SA (CHF 100k) and LEM Malaysia SDN, BHD (CHF 48k), respectively on
December 5, 2019 and December 13, 2019;– LEM Switzerland SA and LEM Tech France SA participations purchase (CHF 54k) from LEM Intellectual Property SA,
in liquidation since January 2, 2020.
Refer to note 26 Scope of consolidation of the consolidated financial statements.
The percentage of ownership corresponds to the percentage of voting rights.

2.

Share capital

Opening capital 1.4.2019

Number ofsharesPar value pershare in CHF

Capital in CHF
thousands

1’140’000

0.50

570

1’140’000

0.50

570

Change of capital
Closing capital 31.3.2020

3.

Treasury shares
Price per share in CHF
NumberLow

Value in CHF
thousands

Value 1.4.2018

652
8’078

1’714.36

1’277.98

935.44

10’445

1’091(7’935)

1’725.57

1’294.96

941.88(10’553)

Value 31.3.2019

795

Purchases at cost

6’773

1’500.27

1’302.78

902.11

8’824(7’012)

1’520.00

1’315.69

917.47(9’226)

Sales at cost
Value 31.3.2020

983

556

Subsidiaries of LEM HOLDING SA did not own any shares of LEM HOLDING SA.
Treasury shares are valued at the lower of cost or market value.

Page 62

Average

Purchases at cost
Sales at cost

LEM Financial Report 19 | 20

High

LEM Financial Report 19 | 20

Page 63581

Notes to the consolidated
financial statements

Notes to the consolidated
financial statements

4.
Dividend from affiliated companies
The dividends from subsidiaries increase is mainly coming from two contrary trends as follows:– LEM Electronics (China) Co. Ltd dividend of CHF 14.2 million (whereas no dividend was paid in 2018/19)– LEM Intellectual Property SA dividend decrease from CHF 37.7 million in 2018/19 to CHF 29.9 million in 2019/20

9.

31.3.2020

31.3.2019

1’803

1’638

31.3. 2020
Number ofshares held

31.3.2019
Number ofshares held

Andreas Hürlimann

1’001

1’001

François Gabella

600

600

Ilan Cohen

300

300

70’70069’500Ulrich Jakob Looser

100

100

Werner C. Weber0072’70171’501

31.3. 2020
Number ofshares held

31.3.2019
Number ofshares held

Frank Rehfeld, CEO

00Andrea Borla, CFO

00

Rebecca Cullinan, SVP Industry

00Rainer Bos, SVP Automotive

0

0

Total

0

0

31.3.2020

31.3.201935’0797’480

In CHF thousands

Amount of guarantees issued

10.
5.

Exchange effect

Shareholdings

Shareholdings of nonexecutive Directors

In CHF thousands

2019/20

2018/19(1’572)(819)

Exchange gains/(losses)
Fair value revaluation on derivatives 1

488

73

Gains/(losses) on derivatives 1(93)(1’101)(1’176)(1’847)

Exchange effect
1 Position includes cost of derivative hedging.

Ueli Wampfler

6.
Office, administration and personnel expense
The office, administration and personnel expense increase is mainly linked to the withholding taxes paid on LEM Electronics
China Co. Ltd dividends for a total amount of CHF 0.7 million.

7.

Guarantees in favor of third parties on behalf of subsidiaries

Total

Shareholdings of Executive Management

Income taxes
2019/20

In CHF thousands

Current taxes
Adjustments of tax provisions of previous periods
Total

2018/19

(477)

(457)

0

75

(477)

(382)

Proposed appropriation of available earnings

8.
Significant shareholders according to article 663c of the Swiss Code of Obligations
On 31 March 2020, the following shareholders held 3 % or more of the share capital and voting rights:

Appropriation of available earnings
31.3.2020
SharesIn number of shares, percent of shareholding

31.3.2019
In %SharesIn CHF thousands

In %Balance brought forward from previous year

Werner O. Weber and Ueli Wampfler, in Zollikon/Wollerau, Switzerland,through WEMACO Invest AG and Swisa Holding AG, in Zug/Cham, Switzerland

582’700

51.1 %

574’500

50.4 %

Variation of treasury shares
Net profit for the year

77’98375’346

Ruth Wertheimer, in Kfar Shmaryahu, Israel, through 7-Industries Holding B.V.,
in Amsterdam, Netherlands

100’081

8.8 %141’58112.4 %

Total available earnings

113’464

82’934(45’600)(47’855)

67’86435’079Invesco, Atlanta, USA

36’883

3.2 %

0

0.0 %

J. Safra Sarasin Investmentfonds AG, Basel, Switzerland

36’0003.2 %36’000

3.2 %Columbia Threadneedle, London, United Kingdom

26’6952.3 %48’142

4.2 %Total shareholders < 3 %384’33633.7 %

339’777

29.8 %

1’140’000

100 %1’140’000

100.0 %Total

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109

Proposal of the Board of Directors
Ordinary dividend
Balance to be carried forward

The Board of Directors proposes the distribution of an ordinary dividend of CHF 40 per share. Net of 35 % withholding tax, thisis an ordinary cash dividend of CHF 26.0 per share. The proposed appropriation of available earnings is made in compliancewith article 671 of the Code of Obligations. Shares held by LEM HOLDING SA or any of its subsidiaries are not entitled to dividends.

LEM Financial Report 19 | 20

Page 65

Auditor’s report

Auditor’s report

Report of the statutory auditor on the financial statements

Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

As statutory auditor, we have audited the financial statements of LEM Holding SA, which comprise the balance sheet,income statement and notes (pages 61 to 65), for the year ended 31 March 2020.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing
and maintaining an internal control system relevant to the preparation of financial statements that are free from material
misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying
appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit toobtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of theaccounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion.

In accordance with article 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control
system exists, which has been designed for the preparation of financial statements according to the instructions of theBoard of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s
articles of incorporation. We recommend that the financial statements submitted to you be approved.
To the General Meeting of LEM Holding SA, Fribourg
Lancy, 15 May 2020
Ernst & Young Ltd

Roland Ruprecht
Licensed audit expert(Auditor in charge)

Victoria Napoly
Licensed audit expert

LEM Financial Report 19 | 20

Page 67

OpinionIn our opinion, the financial statements for the year ended 31 March 2020 comply with Swiss law and the company’s articles of incorporation.
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of thefinancial statements of the current period. We have determined that there are no key audit matters to communicate inour report.

LEM Financial Report 19 | 20

Page 66

Group subsidiaries

LEM is a global player with production plants and development centers in Beijing (China), Geneva (Switzerland), Tokyo (Japan)
and Sofia (Bulgaria). The Company has a dedicated R&D Center in Lyon (France) and sales offices at all its customers’
locations and offers seamless service around the globe.
For a complete list of subsidiaries and offices, refer to www.lem.com > Contact > Sales Locator
Asia

EuropeLEM HOLDING SA
Avenue Beauregard 1
CH-1700 Fribourg

LEM Europe GmbH, Branch Belgium
Egelantierlaan 2
B-1851 Humbeek

LEM Electronics (China) Co. Ltd
Linhe Street 28, Shunyi District
CN-101300 Beijing

LEM International SA
Chemin des Aulx 8
P.O. Box 35
CH-1228 Plan-les-Ouates

LEM Europe Denmark,Filial af LEM Europe GmbH
Haraldsvej 60A,1.
DK-8960 Randers

LEM Japan KK
2-1-2 Nakamachi
JP-Machida, 194-0021 Tokyo

LEM Switzerland SA
Chemin des Aulx 8
P.O. Box 35
CH-1228 Plan-les-Ouates

LEM Europe GmbH,
Succursale France
Avenue Galois 15
F-92340 Bourg-la-Reine

LEM Intellectual Property SA
Avenue Beauregard 1
CH-1700 Fribourg

LEM Europe GmbH,
Succursale Italia
Via V. Bellini 7
I-35030 Selvazzano Dentro, PD

LEM Management Services Sàrl
Chemin des Aulx 8
P.O. Box 35
CH-1228 Plan-les-Ouates
LEM Tech France SAS
Les Allées du Parc
Allée des Parcs 575/655
F-69800 Saint-Priest

LEM Europe GmbH,
Branch UK
Suite 10 West Lancs Investment
Centre Mapleview
Whitemoss Business Park
UK-Skelmersdale WN8 9TG
LEM Bulgaria EOOD
Iliensko Shosse 8
BG-1220 Sofia

LEM Europe GmbH
Frankfurter Straße 74
D-64521 Groß-Gerau

LEM Management Services Sàrl,
Branch India
Level 2, Connaught Place
Bund Garden Road
IN-411 001 Pune
LEM Management Services Sàrl,
Branch Korea
Seocho-Dong
Wonil Bldg.1-3F (311) 10
Nambushuhwan-Ro 333-Gil
Seocho-Gu
KR-Seoul
LEM Management Services Sàrl,
Taiwan Branch
7F., No. 342, Wenlin Road
Shilindistrict
TWN-11163 Taipei

North America

LEM Europe GmbH, Branch Austria
Concorde Business Park 2/F/6
A-2320 Schwechat

LEM Russia, LLC
Staritskoe Shosse 15
RU-170040 Tver

LEM U.S.A., Inc.
11665 West Bradley Road
USA-Milwaukee, WI 53224

Copyright© 2020 LEM HOLDING SA,
Fribourg

LEM Financial Report 19 | 20

Page 68

Concept and text
LEM, Fribourg
Cabinet Privé deConseils SA, Genève
SNK Identities AG, Zurich

DesignSNK Identities AG, Zurich

PhotosMara Truog, Zurich
Getty Images

Printing
Druckprodukt, Zurich

LEM HOLDING SA
Avenue Beauregard 1
1700 Freiburg/Fribourg
Switzerland
www.lem.com

Financial Report 19 | 20